Cross-Border Losses and W AG: The Beginning of the End of the 'Final Loss Exception'?
Cahiers de fiscalité luxembourgeoise et européenne 1/2023, Forthcoming
24 Pages Posted: 6 Jan 2023 Last revised: 7 Mar 2023
Date Written: December 10, 2022
Cross-border loss utilization has been a contentious issue since the Court’s landmark decisions in Marks & Spencer and Lidl Belgium, which assumed comparability between domestic and cross-border situations and embraced the “final loss exception” for foreign subsidiaries and exempt permanent establishments. Following some uncertainty after Timac Agro and Bevola, in its recent judgment in W AG the Court clearly turned its back on Lidl Belgium and found that domestic and treaty-exempt branches are not comparable in the first place. This article critically examines the Court’s reasoning in W AG, its broader implications, and its relation to other lines of the Court’s jurisprudence in the tax area.
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