In European Commission v UK (C-172/13) (23 October 2014) Advocate General Kokott (AG) has declared in her opinion that a UK company holding a UK subsidiary and a UK company holding a non-UK subsidiary are not in an objectively comparable situation with regard to the principle of freedom of establishment.
Following the ECJ’s decision in the Marks & Spencer case (C-446/03) the UK group relief provisions had been amended so that a UK company with a non-UK loss-making subsidiary could claim loss relief (CTA 2010 s 119(4)). However such claims were subject to the ‘no possibilities test’ (NPT) which limited the application of UK group relief to situations where no relief was available in the jurisdiction of the subsidiary. The Commission considered that the UK provisions ‘made it virtually impossible in practice to obtain’ the relief and were therefore in breach of TFEU (Art 49). This...
