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EC refers UK to ECJ

The EC has referred the UK to the European Court of Justice in that the EC believes that Britain has failed properly to implement the ECJ’s previous ruling on cross border losses (the Marks & Spencer case).

Back in 2005, the ECJ ruled that a parent company should not be prevented from deducting the losses of its subsidiaries established in another member state, if all other possibilities to relieve losses have been exhausted. To be honest this is not spectacularly generous.

However, even though the UK amended its legislation after the judgement, the EC believe that the conditions the UK imposed on cross-border group loss relief, make it very difficult to benefit from the relief in practice. The EC considers this to infringe the principles of non-discrimination and freedom of establishment.

The referral to the ECJ is the final step in the infringement procedure.



Date: 26th October, 2012
Author: Cathy Corns


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