Losses unchained: the ECJ’s cross-border travel requirement

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By Melanie Dimitrov and Christian Wimpissinger

The life of losses can be adventurous. Maybe not as adventurous as a journey on a boat with a tiger, but interesting nonetheless. That is especially true when it comes to the cross-border travel of losses within the EU if the travel is triggered by a merger.

The journey started in Sweden. A 100 per cent Swedish-held subsidiary that incurred losses over the years was merged into its Finnish parent company. After the merger, the parent left behind no operations in Sweden, in particular no permanent establishment. A ruling request of the parent asking whether the losses incurred by its merged Swedish subsidiary arrived in Finland in order to offset profits of the parent led to proceedings at the European Court of Justice, because the fiscal authorities did not allow the transfer…

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