December 13, 2005

EU court backs M&S in tax ruling with conditions

BRUSSELS (Reuters) - The European Union's top court ruled
on Tuesday that British retailer Marks & Spencer can claim tax
relief from losses outside its home market with certain
conditions, in a judgment that could cost European governments
billions of euros.

"Where in one Member State the resident parent company
demonstrates to the tax authorities that those conditions are
fulfilled, it is contrary to freedom of establishment to
preclude the possibility for the parent company to deduct from
its taxable profits in that Member State the losses incurred by
its non-resident subsidiary," the European Court of Justice in
Luxembourg said in a statement.

The condition was that the loss-making subsidiaries are
unable to claim tax relief in the country where they are
established, it said.