CJ rules that the concept of final losses of a non-resident subsidiary does not apply to a sub-subsidiary unless all the intermediate companies between the parent company applying for group relief and the sub-subsidiary sustaining losses that could be regarded as final are established in the same Member State (Holmen)
On 19 June 2019, the CJ issued its judgment in the case Holmen (C-608/17). This case deals with the question
whether a Swedish parent company has the right, on the basis of Article 49 in conjunction with Article 54 TFEU, to
deduct from its profit losses in an Spanish sub-subsidiary if the sub-subsidiary has been liquidated and was not able
to use all its losses in Spain. The Swedish parent company based its argument on the final losses exception from the
Marks & Spencer Judgment (C-446/03).
The CJ ruled that the concept of final losses of a nonresident subsidiary, within the meaning of paragraph 55 of the judgment in Marks & Spencer, does not apply to a subsubsidiary unless all the intermediate companies between
the parent company applying for group relief and the subsubsidiary sustaining losses that could be regarded as final are established in the same Member State. In other words, for the CJ it is not disproportionate to make cross-border
tax relief conditional on a direct link, even if the other impossibilities referred to in paragraph 55 of the judgment
in Marks & Spencer have been met. Such direct link is only not required if both the intermediate subsidiary and the
sub-subsidiaries that sustained the losses are all resident in the same Member State.
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