C-66/14 Finanzamt Linz v Bundesfinanzgericht, Aubenstelle Linz
On 6 October 2015 the CJEU held that Austrian legislation on the amortisation of goodwill which differentiated between participation in resident and non-resident companies was incompatible with Article 49 TFEU. According to the provisions in question, in the context of group taxation a parent company acquiring a holding in a resident company was allowed to depreciate the goodwill up to a maximum of 50% of the purchase price. However, such depreciation was prohibited in the case of the acquisition of a holding in a non-resident company.
The Court held that the legislation disadvantaged parent companies which acquire a holding in a non-resident company and it was thus liable to deter those companies from acquiring or setting up subsidiaries in other Member States. There was no overriding reason in the general interest which justified the difference in treatment in this case. Therefore, the legislation was precluded by the freedom of establishment provisions in Art 49 TFEU. In reaching this conclusion, the Court dismissed the Austrian government’s argument that the differential treatment of resident and non-resident companies for the purpose of goodwill depreciation could be justified by reference to the difference in the tax attribution to the parent company of the profits and losses of resident subsidiaries, on the one hand, and non-resident subsidiaries, on the other.
This article appears in the JHA November 2015 Tax Newsletter, which also features:
