How Does the CJEU’s Case Law on Cross-Border Loss Relief Apply to Cross-Border Mergers and Divisions?

Abstract

The common system of taxation laid down in the Merger Directive does not require Member States to give cross-border loss relief further to a cross-border merger or division, and allows previously deducted permanent establishment losses to be recaptured upon a cross-border restructuring. This article analyses the CJEU’s case law in A Oy and Commission v. UK, and attempts to define under which circumstances cross-border loss relief can be claimed on the basis of primary EU law. In addition, the author examines which conclusions can be drawn from the recent CJEU judgments in Nordea Bank and Timac Agro for cross-border mergers and divisions, i.e., if the recapture rule of Article 10(1) paragraph 2 of the Merger Directive is compatible with Article 49 TFEU.