# C_2023029EN.01003901.xml

| 26.1.2023 | EN | Official Journal of the European Union | C 29/39 |
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26.1.2023

EN

Official Journal of the European Union

C 29/39

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JUDGMENT OF THE COURT

of 1 June 2022

in Case E-3/21

PRA Group Europe AS v the Norwegian Government, represented by the Tax Administration

(Freedom of establishment – Direct taxation – Group contribution rules – Limitation on the deductibility of interest payments to affiliated parties – Comparable situations – Another tax advantage)

(2023/C 29/04)

In Case E-3/21, PRA Group Europe AS v the Norwegian Government, represented by the Tax Administration – REQUEST to the Court under Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice by Oslo District Court (Oslo tingrett), concerning the interpretation of the rules on freedom of establishment, in particular the interpretation of Article 31 of the Agreement on the European Economic Area, read in conjunction with Article 34, the Court, composed of Páll Hreinsson, President, Per Christiansen and Bernd Hammermann (Judge-Rapporteur), Judges, gave judgment on 1 June 2022, the operative part of which is as follows:

| 1. | In the context of national legislation such as that at issue in the main proceedings, a foreign EEA-based company which is in a group with a Norwegian-based company is in a comparable situation to that of a Norwegian-based company which is in a group with another Norwegian-based company. It is immaterial for the comparability assessment that no actual group contribution has been made from the company based in another EEA State to the Norwegian-based company.
  Article 31 EEA, read in conjunction with Article 34 EEA, must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, constitutes a restriction on the freedom of establishment where a company liable to taxation in Norway may, by using group contribution rules, lessen or remove the impact of rules limiting interest deductions in respect of loans taken out with affiliated companies, provided it is in a group with other companies liable to taxation in Norway, whereas this is not possible if it is in a group with companies liable to taxation in other EEA States. |
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1.

In the context of national legislation such as that at issue in the main proceedings, a foreign EEA-based company which is in a group with a Norwegian-based company is in a comparable situation to that of a Norwegian-based company which is in a group with another Norwegian-based company. It is immaterial for the comparability assessment that no actual group contribution has been made from the company based in another EEA State to the Norwegian-based company.

Article 31 EEA, read in conjunction with Article 34 EEA, must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, constitutes a restriction on the freedom of establishment where a company liable to taxation in Norway may, by using group contribution rules, lessen or remove the impact of rules limiting interest deductions in respect of loans taken out with affiliated companies, provided it is in a group with other companies liable to taxation in Norway, whereas this is not possible if it is in a group with companies liable to taxation in other EEA States.

| 2. | A restriction arising from national legislation such as that at issue in the main proceedings may be justified where it serves the legitimate objective of preventing wholly artificial arrangements leading to tax avoidance. However, if national law, which is for the referring court to determine, does not provide the taxpayer with the opportunity to demonstrate that the transaction took place on terms corresponding to what would have been agreed had the relationship between the parties been one at arm’s length, it goes beyond what is necessary to pursue that objective. |
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2.

A restriction arising from national legislation such as that at issue in the main proceedings may be justified where it serves the legitimate objective of preventing wholly artificial arrangements leading to tax avoidance. However, if national law, which is for the referring court to determine, does not provide the taxpayer with the opportunity to demonstrate that the transaction took place on terms corresponding to what would have been agreed had the relationship between the parties been one at arm’s length, it goes beyond what is necessary to pursue that objective.

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