Tax relief is a ‘basic need for businesses that expand beyond national borders’, says tax commissioner
The European Commission has decided to refer the UK’s tax legislation on cross-border tax relief to the Court of Justice of the European Union. The referral is the last step in the infringement procedure. The EC considers that the UK has failed to properly implement the court’s 2005 ruling in Marks & Spencer v Halsey.
The court ruled that a parent company should not be prevented from deducting the losses of its subsidiary established in another member state if all other possibilities have been exhausted, the EC said.
‘Although the UK amended its legislation after the judgement, it continues to impose conditions on cross-border group loss relief which, in practice, make it very difficult to benefit from. The Commission considers this to infringe the principle of non-discrimination and the freedom of establishment, set down in the Treaty.’
Tax commissioner Algirdas Šemeta said: ‘Cross-border loss relief is a basic need for businesses that expand beyond national borders. It is essential for entrepreneurship and for creating a positive business environment within the single market. I therefore urge the UK and all member states to respect the case law on this matter.’
The ICAEW Tax Faculty noted that UK law was amended in 2006: ‘But ICAEW and other organisations felt that the changes did not go far enough and drew these concerns to the attention of the EC. The EC shared our concerns and began infringement proceedings against the UK government.’
Tax relief is a ‘basic need for businesses that expand beyond national borders’, says tax commissioner
The European Commission has decided to refer the UK’s tax legislation on cross-border tax relief to the Court of Justice of the European Union. The referral is the last step in the infringement procedure. The EC considers that the UK has failed to properly implement the court’s 2005 ruling in Marks & Spencer v Halsey.
The court ruled that a parent company should not be prevented from deducting the losses of its subsidiary established in another member state if all other possibilities have been exhausted, the EC said.
‘Although the UK amended its legislation after the judgement, it continues to impose conditions on cross-border group loss relief which, in practice, make it very difficult to benefit from. The Commission considers this to infringe the principle of non-discrimination and the freedom of establishment, set down in the Treaty.’
Tax commissioner Algirdas Šemeta said: ‘Cross-border loss relief is a basic need for businesses that expand beyond national borders. It is essential for entrepreneurship and for creating a positive business environment within the single market. I therefore urge the UK and all member states to respect the case law on this matter.’
The ICAEW Tax Faculty noted that UK law was amended in 2006: ‘But ICAEW and other organisations felt that the changes did not go far enough and drew these concerns to the attention of the EC. The EC shared our concerns and began infringement proceedings against the UK government.’
