I'm worryingly excited about this.

[puddingcat]

"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."

(Marks & Spencer plc v Halsey)

Comments

[jonnyargles.livejournal.com]

Whereas it's obviously great news for the businesses who've screwed up overseas, I can't help but think it's putting the cart before the horse. In my layman's reading, it makes the assumption that all trade should be subject to the same tax rules, er, but we don't have the same tax laws in europe, so why should ventures in different countries be treated the same? Unless, of course, all their costs were offset against UK VAT laws, in which case call be a rambling old fool.

I'm also less than chuffed about how much this is going to cost the treasury, already stuck in a 'black hole'.

In other news, THIS has just been overturned: http://www.menzies.co.uk/news_room/business+news/111

[puddingcat.livejournal.com]

Not allowing overseas losses to be offset against UK profits was contrary to the freedom of establishment rights detailed in the EC treaty.

A Member State may treat overseas entities differently from resident entities; it mayimpose restrictions so that the losses can't be used in both states; and it can limit free transfer of losses so prevent groups relieving profits in states with the highest tax rates.

So the decision means that there must be no possibility of using the losses in the overseas state, if they're to be set against profits in the UK.

Regarding the black hole, that's Gordon Brown's excessive spending at work. The M&S decision will work both ways; UK losses can be used by overseas companies if the conditions are met. Alignng the tax systems of EU mamber states will vastly simplify business, since lots of the complicated group structures won't be relevant any more.