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ECJ rules in favour of UK over cross-border group relief using M&S basis

The European Court of Justice (ECJ) has rejected a challenge by the European Commission that UK legislation on the tax relief available for losses incurred by foreign-based subsidiaries of UK companies unfairly limited the possibility of claiming cross-border group relief

The ruling announced today [Case C-172/13 Commission v United Kingdom] is the latest in a long running series of legal challenges relating to an earlier case concerning claims for cross-board group relief brought by retailer Marks & Spencer.

Following the ECJ judgment in Marks & Spencer [Case C-446/03)], in 2006 the UK decided to allow cross-border group relief subject to certain conditions. The court has now dismissed the Commission’s claim that this move was not compatible with EU law.

In the latest case, the Commission sought to argue that changes to the Corporation Tax Act 2010 (CTA 2010) rules made it virtually impossible for a resident parent company to obtain cross-border group relief, since in practice it allows the losses to be taken into account in only two situations.

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