The European Court of Justice today issued its opinion in Marks & Spencer PLC v. Halsey (Judgment C-446/03):
As Community law now stands, Articles 43 EC and 48 EC do not preclude provisions of a Member State which generally prevent a resident parent company from deducting from its taxable profits losses incurred in another Member State by a subsidiary established in that Member State although they allow it to deduct losses incurred by a resident subsidiary. However, it is contrary to Articles 43 EC and 48 EC to prevent the resident parent company from doing so where the non-resident subsidiary has exhausted the possibilities available in its State of residence of having the losses taken into account for the accounting period concerned by the claim for relief and also for previous accounting periods and where there are no possibilities for those losses to be taken into account in its State of residence for future periods either by the subsidiary itself or by a third party, in particular where the subsidiary has been sold to that third party.
(Thanks to Reuven Avi-Yonah (Michigan) for the tip.)
Update:
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EU Observer: EU Corporate Tax Drive Boosted by Landmark Ruling
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New York Times: Court Grants Marks & Spencer Tax Rebate
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TimesonLine: Judgment Means Tax Rules Need Not Change
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Wall Street Journal: EU Court Grants Retailer $52 Million Tax Rebate
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Wall Street Journal: UK Govt May Change Tax Law To Comply With EU M&S Ruling
