RT Journal Article
T1 An Ever distant Union: the Cross-Border Loss Relief Conundrum in EU Law
A1 Ruiz Almendral, Violeta
AB Cross-border loss relief may well be the last milestone, barring total tax consolidation, in the European Union (EU) market integration from a tax law perspective. As the Commission’s Communication on the Tax Treatment of Losses in Cross-Border Situations demonstrates, there is yet a lot of ground to be covered in harmonizing this aspect of corporate income taxes (CITs). While the Common Consolidated Corporate Tax Base (CCCTB) proposal seems to be stalled, a series of relatively recent European Court of Justice (ECJ) cases (among others, X Holding BV) may be tilting the balance in the interest of Member States, for the first time allowing the safeguard of revenues, or the ‘balanced allocation of taxing powers’ to be the deciding argument in allowing restrictions on the offsetting of losses. Losses cannot be analysed in isolation of the rules to determine the taxable base, as they are one more piece in the tax base puzzle. In this article, I focus on two issues: multinational groups and permanent establishments (PEs), as they comprise the main problems arising in cross-border loss relief. The different methods employed to grant loss relief are assessed, as well as the new Organisation for Economic Co-operation and Development (OECD) proposals on the taxation of PEs. My main argument is that restrictions of loss relief have an effect that go beyond discriminating or restricting – that is, beyond making it ‘less attractive’ to move around the EU. Such restrictions touch the core of taxation of income. If no loss relief is provided, the tax is not reflecting the real ability to pay, thus not only is it not being neutral and inefficient, it is also creating a fictional tax debt.
PB Kluwer Law International
SN 0165-2826
YR 2010
FD 2010
LK https://hdl.handle.net/10016/10727
UL https://hdl.handle.net/10016/10727
LA eng
NO Web del editor: http://www.kluwerlaw.com
NO It has been completed in the framework of a Publicly Funded Research Project on Direct Tax Harmonization in the EuropeanUnion (titled La fiscalidad directa en la Unión Europea: entre competencia y convergencia), financed by the Spanish Ministry of Science and Innovation (Ref. DER 2010-20000, Dir. JuanZornoza). This work has also benefited from a Senior Professors Research Grant from the Spanish Ministry of Education (Beca de Movilidad de Profesores, Programa Senior, Ministerio deEducación), as well as from a post-maternity research help.
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