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Foggia – Sociedade Gestora de Participações Sociais SA v Secretário de Estado dos Assuntos Fiscais

Principal objective of merger

In Foggia – Sociedade Gestora de Participações Sociais SA v Secretário de Estado dos Assuntos Fiscais (CJEU Case C-126/10) the CJEU held that Article 11(1)(a) of Directive 90/434/EEC ‘is to be interpreted as meaning that in the case of a merger operation between two companies of the same group the fact that on the date of the merger operation the acquired company does not carry out any activity does not have any financial holdings and transfers to the acquiring company only substantial tax losses of undetermined origin even though that operation has a positive effect in terms of cost structure savings for that group may constitute a presumption that the operation has not been carried out for "valid commercial reasons" within the meaning of Article 11(1)(a).

It is incumbent on the national court to verify ...

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