Brussels, 15/12/2005 (Agence Europe) - There has been a warm welcome to the landmark Court of Justice ruling in the Marks & Spencers case on cross-border tax relief (see EUROPE 9088). Laszlo Kovacs, EU Commissioner for Taxation and Customs, welcomed the ruling confirming the freedom of establishment: 'It is clear that Member States and the Commission will have to work together so as do draw conclusions from this judgement with a view to ensuring clarity for businesses operating within the Single Market and ensuring that Treaty obligations are respected. It is also clear that we cannot at this stage make any calculations on budgetary consequences for the Member States concerned.' A spokesperson for the Commissioner told reporters that a document would probably be published next year on cross-border compensation but the nature of the legislation was not yet clear. Member States like Germany, France, the Netherlands, Greece, Sweden, Finland and Ireland have already submitted comments on the issue, concerned about the potential impact on their budgets.
European employers' organisation UNICE says the 'ruling provides a better opportunity for cross-border group consolidation within the EU. It thus constitutes a step in the right direction towards better functioning of the internal market… Full cross-border relief on losses and the elimination of double taxation of intra-group transactions will be possible with a common consolidated corporate tax base.; UEAPME, the voice of SMEs in Europe, comments 'it is only natural that firms should be allowed to repatriate their European losses.' But Gerhard Huemer, UEAPME Director of Economic and Fiscal Policy, said: 'Unless this decision is accompanied by real moved towards a common consolidated tax base, it will only benefit large firms.'
The Commission aims to deal with the two issues separately, but there is a danger that the ruling will relaunch debate on the creation of a common consolidated tax base, as desired by the Commission (with the exception of Commissioners McCreevy and Grybauskaite, see EUROPE 9063). In October, the European Commission said it would be unveiling new legislation in 2008.