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On January 10, 2019 the Court of Justice of the European Union (CJEU) judged in Case C-410/17 A Oy, intervening party: Veronsaajien oikeudenvalvontayksikkö (ECLI:EU:C:2019:12).
This request for a preliminary ruling concerns the interpretation of Article 2(1)(a) and (c), Article 14(1) and Article 24(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (the ‘VAT Directive’).
The request has been made in proceedings brought by A Oy concerning the treatment, for the purposes of value added tax (VAT), of transactions made, first, under a demolition contract requiring the service provider to dispose of demolition waste which, as it contains iron, may, pursuant to that contract, be resold by the latter and, second, under a contract for the purchase of goods for dismantling, which includes the obligation for the purchaser to demolish or dismantle (hereinafter referred to collectively as ‘dismantling’) and to dispose of those goods, together with the disposal of the resulting waste.
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On January 10, 2019 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Kokott in the Case C-607/17, Skatteverket versus Memira Holding AB (ECLI:EU:C:2019:8) was published.
The point at issue in this case is whether a Swedish parent company has the right, on the basis of Article 49 TFEU in conjunction with Article 54 TFEU, to deduct the losses in a wholly-owned subsidiary established in Germany from its profits if that subsidiary is wound up by way of a merger with the parent company and it was not able fully to ‘use’ its losses made in Germany there.
The fundamental freedoms do not in principle require cross-border use of losses within a group. Losses arising abroad would thus be forfeited. Only in the case of final losses is it possible that cross-border use of losses is necessary, for reasons of proportionality, in accordance with the judgment delivered by the Grand Chamber of the Court of Justice in Marks & Spencer in 2005.
A number of problems have grown up around these ‘final losses’, which have already led to several decisions by the Court. However, the decisions thus far have not been able to clarify definitively the conditions for final losses, as is evident from this new reference. In this regard, the Court will presumably repeatedly be given an opportunity — if it still wishes to adhere to the final losses exception — to refine this category.
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On January 10, 2019 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Kokott in the Case C-608/17, Skatteverket versus Holmen AB (ECLI:EU:C:2019:9) was published.
In the present case and one other case, the Court is dealing with the implementation and interpretation of its case-law by the Member States, in this instance the Kingdom of Sweden. The point at issue is whether a Swedish parent company has the right, on the basis of Article 49 in conjunction with Article 54 TFEU, to deduct losses in an indirectly and wholly owned Spanish subsidiary (a sub-subsidiary) from its profits made in Sweden if the sub-subsidiary has been liquidated and was not able to use all its losses in Spain (that is, to set them off against its own or other profits of the Spanish group).
The Grand Chamber of the Court of Justice ruled in 2005 that cross-border use of losses within a group is not required in principle by the fundamental freedoms. Losses arising abroad would be forfeited and could not therefore be used by other members of the group in national territory. Provision is to be made for cross-border use of losses only in the case of final losses in accordance with the principle of proportionality.
A number of problems have grown up around this category of ‘final losses’ created by the Court, which has already led to several decisions by the Court (including two others by the Grand Chamber). However, none of these decisions thus far have been able to clarify definitively the conditions for final losses.
In this regard, the Court has another opportunity — if it still wishes to adhere to the final losses exception — to refine this category.
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