The ECJ on the Verge of a Member State Friendly Judicature? – Annotation to the Marks & Spencer Judgement, ECJ 13. 12. 2005, C-446/03

Seer Roman
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Seer Roman: Prof. Dr. iur., Holder of the chair of tax law, Ruhr-University Bochum.

European Company and Financial Law Review, 2006, vol. 3, issue 2, 237-247

Abstract: On 13 December 2005, the Grand Chamber of the European Court of Justice (ECJ) has issued apart from the SEVIC case the second decision in the field of cross-border company activities. In contrast to many literary anticipations, the Court did not reject the UK domestic focused group taxation system as a general violation of Art. 43 and 48 EC Treaty. The ECJ rather tries to balance the fundamental freedoms and the legal and budgetary interests of the Member States by emphasizing the principle of territoriality. Only if the foreign subsidiary (or a third party as a purchaser) has no opportunity to effectively use its incurred losses in the state of its domicile, the state of residence of the parent company is obliged by Community law to reduce he losses from the taxable income (ultima ratio-principle). The reasons given for the judgement leave much uncertainty and reveal a lack of dogmatic foundation.

Date: 2006
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DOI: 10.1515/ECFR.2006.010

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