Publications Description

CFE Tax Advisers Europe has published an Opinion Statement on the Court of Justice decision of 12 June 2018, in Case C-650/16 Bevola, concerning the utilisation of “definitive losses” attributable to a foreign permanent establishment and the viability of the Marks & Spencer “definitive losses” doctrine.

CFE welcomes the Court’s approach in Bevola, under which the comparability in territorial systems regarding “definitive losses” was linked to the ability to pay. The Court’s decision in Bevola reaffirms that its concept of “definitive losses”, which was first established in Marks & Spencer and refined, inter alia, in Commission v. United Kingdom is still applicable to permanent establishments. Rejecting a reading of Nordea Bank and Timac Agro advanced by national governments, the European Commission and several national supreme tax courts, under which domestic and foreign permanent establishments were deemed as not comparable in territorial systems, the Court reiterated that the standard for testing comparability remains related to the aim pursued by the national provisions at issue. CFE notes, however, the increasing difficulty of applying the comparability test in a coherent manner, despite all the efforts of the Court in this respect.

We invite you to read the Opinion statement of the CFE ECJ Task Force below.