Keywords

Summary



Keywords

1 Freedom of movement for persons - Freedom of establishment - Equal treatment - Direct taxation - Revenue tax - Legislation of a Member State making the carrying forward of losses incurred by a non-resident taxpayer subject to the existence of an economic link between those losses and the income earned in that Member State - Whether permissible - Conditions

(EEC Treaty, Art. 52)

2 Freedom of movement for persons - Freedom of establishment - Procedural rules concerning revenue tax - Restrictions - Legislation of a Member State making the carrying forward of losses incurred by a non-resident taxpayer subject to the keeping and holding, in that Member State, of accounts complying with national rules - Not permissible - Justification on grounds of public interest - Effectiveness of fiscal supervision - Obligation for the taxpayer to demonstrate clearly and precisely that the losses declared correspond to the losses actually incurred - Whether permissible

(EEC Treaty, Art. 52)

Summary

3 Article 52 of the Treaty does not preclude a Member State from making the carrying forward of previous losses, requested by a taxpayer which has a branch in its territory but is not resident there, subject to the condition that the losses must be economically linked to the income earned in that State, provided that resident taxpayers do not receive more favourable treatment.

4 Article 52 of the Treaty precludes a Member State from making the carrying forward of previous losses, requested by a taxpayer which has a branch in its territory but is not resident there, subject to the condition that, in the year in which he incurred those losses, he must have kept and held in that Member State accounts relating to his activities carried on there which comply with its relevant national rules.

Such a condition may constitute a restriction, within the meaning of Article 52 of the Treaty, on the freedom of establishment of companies or firms which wish to establish a branch in a Member State different from that in which they have their seat, in that it requires them to keep and to hold, at the place where the branch is established and in addition to their own accounts which must comply with the tax accounting rules applicable in the Member State in which they have their seat, separate accounts for the branch's activities, complying with the tax accounting rules applicable in the State in which the branch is established.

Although that condition may be justified by a pressing reason of public interest, namely the effectiveness of fiscal supervision, it is not essential, in this regard, that the means by which the non-resident taxpayer is allowed to demonstrate the amount of the losses he seeks to carry forward be limited to those provided for by the national legislation concerned. However, a Member State may, for that pressing reason of public interest, require the non-resident taxpayer to demonstrate clearly and precisely that the amount of the losses which he claims to have incurred corresponds, under its domestic rules governing the calculation of income and losses which were applicable in the financial year concerned, to the amount of the losses actually incurred by the taxpayer in that State.