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Changes in cross border loss offset may be on the cards

The European commission has sent the United Kingdom a formal request properly to implement the European Court of Justice judgement on cross border loss offset in the Marks & Spencer case.

In that case the Court ruled that the UK ban on cross border loss relief was disproportionate, in so far as it denied loss relief where a non-resident subsidiary had exhausted all possibilities for relief in its state of establishment. Following this ruling, the UK should in principle grant relief for definitive losses of a subsidiary established in another Member State.

In the legislation meant to implement the ruling, the UK imposed conditions on cross border group relief which make it virtually impossible for tax payers to benefit from the relief. The Commission consider that this is contrary to the EC Treaty.



Date: 13th October, 2008
Author: Cathy Corns


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