Nordea Bank Danmark A/S v Skatteministeriet.
Date: 2014-07-17
17. Freedom of establishment, which Article 49 TFEU grants to European Union nationals, includes the right for them to take up and pursue activities as self‑employed persons and to set up and manage undertakings under the conditions laid down for its own nationals by the law of the Member State where such establishment is effected. It entails, in accordance with Article 54 TFEU, for companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the European Union, the right to exercise their activity in the Member State concerned through a subsidiary, a branch or an agency (see, to this effect, the judgments in Saint-Gobain ZN , C‑307/97, EU:C:1999:438, paragraph 35, and Marks & Spencer , C‑446/03, EU:C:2005:763, paragraph 30).
18. Whilst the provisions of the FEU Treaty concerning freedom of establishment are directed to ensuring that foreign nationals and companies are treated in the host Member State in the same way as nationals of that State, they also prohibit the Member State of origin from hindering the establishment in another Member State of a company incorporated under its legislation, in particular through a permanent establishment (see, to this effect, the judgment in Lidl Belgium , C‑414/06, EU:C:2008:278, paragraphs 19 and 20).
19. It is apparent from the Court’s case-law that freedom of establishment is hindered if, under a Member State’s legislation, a resident company having a subsidiary or a permanent establishment in another Member State or in another State that is party to the EEA Agreement suffers a disadvantageous difference in treatment for tax purposes compared with a resident company having a permanent establishment or a subsidiary in the first Member State (see to this effect, in particular, the judgments in Papillon , C‑418/07, EU:C:2008:659, paragraphs 16 to 22, and Argenta Spaarbank , C‑350/11, EU:C:2013:447, paragraphs 20 to 34).
20. A provision which allows losses incurred by a permanent establishment situated in another Member State or in another State that is party to the EEA Agreement to be taken into account in calculating the profits and taxable income of the principal company constitutes a tax advantage (see, to this effect, the judgment in Lidl Belgium , EU:C:2008:278, paragraph 23).
21. It is clear that the provisions of Paragraph 33 D(5) of the ligningsloven at issue in the main proceedings result in such an advantage being denied to Danish companies having permanent establishments abroad compared with those having permanent establishments in Denmark. They lay down a rule requiring the reincorporation of losses lawfully deducted in respect of the foreign establishments transferred which does not apply if establishments in Denmark are transferred in identical circumstances.
22. That disadvantageous treatment is liable to deter a Danish company from carrying on its business through a permanent establishment situated in a Member State or in a State that is party to the EEA Agreement other than the Kingdom of Denmark and therefore constitutes a restriction prohibited in principle by the provisions of the Treaty and the EEA Agreement that relate to freedom of establishment.
23. It is clear from the Court’s case-law that such a restriction is permissible only if it relates to situations which are not objectively comparable or if it is justified by an overriding reason in the public interest (see, to this effect, the judgment in Philips Electronics UK , C‑18/11, EU:C:2012:532, paragraph 17 and the case-law cited).
24. As regards comparability of the situations, it should be pointed out that, in principle, permanent establishments situated in another Member State or in another State that is party to the EEA Agreement are not in a situation comparable to that of resident permanent establishments in relation to measures laid down by a Member State in order to prevent or mitigate the double taxation of a resident company’s profits. However, by making the profits of permanent establishments situated in Finland, Sweden and Norway subject to Danish tax, the Kingdom of Denmark has equated those establishments with resident permanent establishments so far as concerns the deduction of losses (see, by analogy, the judgment in Denkavit Internationaal and Denkavit France , C‑170/05, EU:C:2006:783, paragraphs 34 and 35).
25. The restriction can therefore be justified only by overriding reasons in the public interest. It is further necessary, in such a case, that the restriction be appropriate for ensuring the attainment of the objective that it pursues and not go beyond what is necessary to attain it (see the judgment in Lidl Belgium , EU:C:2008:278, paragraph 27 and the case-law cited).
27. It should be recalled that, in the absence of any unifying or harmonising measures of the European Union, the Member States retain the power to define, by treaty or unilaterally, the criteria for allocating their powers of taxation, particularly with a view to eliminating double taxation, and that preservation of that allocation is a legitimate objective recognised by the Court (see, in particular, the judgment in Argenta Spaarbank , EU:C:2013:447, paragraph 50 and the case-law cited).
32. It should be recalled that the balanced allocation of the power to impose taxes has the objective of safeguarding the symmetry between the right to tax profits and the right to deduct losses (see the judgment in K , C‑322/11, EU:C:2013:716, paragraph 51 and the case-law cited).
33. The need to safeguard that symmetry means that the losses deducted in respect of the permanent establishment must be capable of being offset by taxation of the profits made by it under the tax jurisdiction of the Member State in question, that is to say, both the profits made throughout the period when the permanent establishment belonged to the resident company and those made at the time of the permanent establishment’s transfer.