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Scheuten Solar Technology GmbH v Finanzamt Gelsenkirchen-Süd

Under German legislation interest payments were not fully deductible when determining the taxable profits of the company making the payment.

In Scheuten Solar Technology GmbH v Finanzamt Gelsenkirchen-Süd (ECJ Case C-397/09) a German subsidiary of a Netherlands company appealed contending that this contravened Directive 2003/49/EC and the case was referred to the ECJ.

The ECJ rejected the company’s contentions holding that Article 1(1) of Directive 2003/49/EC ‘must be interpreted as not precluding a provision of national tax law under which loan interest paid by a company established in one Member State to an associated company in another Member State is incorporated into the basis of assessment of the business tax payable by the former company’.

Why it matters: Directive 2003/49/EC provides an exemption for certain interest and royalty payments.

The company put forward a contention...

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