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Cross-border loss relief: Possibilites for cross-border loss relief for a Swedish parent company with subsidiaries in another Member State.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2017 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Companies may choose to pursue business through groups of companies for strategic reasons. Groups of companies function as a single economic unit but are separately taxable entities. Many countries have applied rules for allowing for balancing of profits and losses within these groups of companies. This have been done so companies will not choose company structure based on tax reasons. These rules have worked well in a purely domestic situation. In cross-border situations the possibilities for balancing profits and losses were for a long time very limited. In 2005, the ECJ delivered its decision in the ground-breaking Marks & Spencer case. For the first time a parent company were allowed to deduct losses from a subsidiary in another Member State if certain conditions were met. These losses qualifying for deduction by the parent company has since been known as final losses. The Marks & Spencer case was subject to heavy criticism by scholars at the time. The critics argued the rules were unclear and difficult to apply. Member States, including Sweden, subsequently amended their national legislations to comply with the recent developments in EU law. Sweden added chapter 35a to Inkomstskattelagen (Income Tax Act). However, the new chapter was criticized for being a very restrictive interpretation of the Marks & Spencer case and there was much discussion on whether the new rules were compliant with EU law. Despite the uncertainty surrounding the new rules and the call for the principles to be abandoned, the ECJ kept confirming that the rules were still applicable in a few subsequent cases over the years but for a long time failed to clarify any further which losses were deemed to be final. However, with time it has become clear that the ECJ has narrowed the scope of what losses allowed for deduction to the point where there now has been uncertainty if any possibility in practice exists at all. As the Swedish rules are relatively new, HFD has still not delivered any decision on the interpretation of these rules. The Swedish rules allowed for losses incurred by a subsidiary in another Member State to be deducted subject to certain conditions. The development in EU case law and the ECJ interpretation of the articles of the Treaty is of relevance for the Swedish rules in this area as EU law has primacy over Swedish domestic legislation. This essay aims to clarify the current possibilities for cross-border loss relief for a Swedish parent company with a subsidiary in another Member State.

Place, publisher, year, edition, pages
2017. , 24 p.
Keyword [en]
Cross-border loss relief
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-323956OAI: oai:DiVA.org:uu-323956DiVA: diva2:1107960
Subject / course
Commercial Law
Educational program
Freestanding course
Supervisors
Examiners
Available from: 2017-07-04 Created: 2017-06-12 Last updated: 2017-07-04Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf