Marks & Spencer case moves forward
The Marks & Spencer Case moves forward. M&S, being a UK resident company, claims a deduction of losses that its subsidiaries in Belgium, France and Germany incurred. The UK Inland Revenue does not accept such deduction because UK tax law stipulates that this is possibility is limited to losses of UK resident subsidiaries.
M&S has taken the case to the European Court of Justice arguing that this limitation is in conflict with the EU principles of Freedom of establishment. When the court would decide in favour of M&S this could have significant consequences for multinational companies regardless whether they have their headquarters in the UK or elsewhere.
Such decision would certainly sustain our view that it should be possible to create a fiscal unity between a Dutch company and its foreign subsidiaries A decision in this important case is not expected shortly.
Whatever, the outcome of the case will be, the issue that is at stake in the M&S case again emphasises the friction between traditional approach of taxation of resident taxpayers (taxation on a worldwide basis) and the principles of EU law. These issues can only be avoided by changing the fundaments of the (corporate) income tax system.
