In Re A Oy (CJEU Case C-123/11) a Finnish company merged with a Swedish subsidiary and claimed that the losses of that subsidiary should be deductible from its profits taxed in Finland. The Finnish tax authority rejected the claim and the company appealed. The case was referred to the CJEU for a ruling on the interpretation of art 49 of the TFEU. The CJEU held that art 49 did not ‘preclude national legislation under which a parent company merging with a subsidiary established in another Member State which has ceased activity cannot deduct from its taxable income the losses incurred by that subsidiary in respect of the tax years prior to the merger while that national legislation allows such a possibility when the merger is with a resident subsidiary’. However such legislation would be ‘incompatible with European Union law if it does not allow the...
