In X AB v Skatteverket (C-686/13) the CJEU’s advocate general (AG Kokott) considered that the non-deductibility of forex losses on a disposal subject to the participation exemption was not a breach of the freedom of establishment.
AB a Swedish company held shares denominated in US dollars in a UK company. The cessation of the subsidiary’s activities amounted to a sale for Swedish tax purposes thereby triggering a forex loss. The Swedish tax authorities had indicated that the loss would not be allowable. AB contended that following Deutsche Shell (C-293/06) this represented a breach of the principle of freedom of establishment.
The AG noted that under the participation exemption gains and losses made on disposals of shares in ‘sociétés anonymes’ are not taken into account for tax purposes. It added that the principle of freedom of establishment was relevant as AB had...
