Loss Relief, Impact of Relocating Your Company
A recent opinion by Advocate General Kokott in the AURES Holdings case (C-405/18) serves as a warning to those considering the relocation of their companies pursuant to the freedom of establishment granted under Articles 49 and 54 TFEU. As background to this case, AURES Holdings (Aures) suffered a tax loss whilst it was established in the Netherlands in 2007. On 1 January 2008, it set up an organisational entity in the Czech Republic. Following the move, it remained a taxable entity in the Netherlands but did not carry on any economic activity. As such, it could no longer take the loss into account when calculating its tax liability in the Netherlands. Aures, therefore, looked to offset these losses against its tax liability in the Czech Republic. However, the tax authority for the Czech Republic refused this relief on the basis that the loss had not been suffered in the Czech Republic. Following proceedings brought by Aures to challenge this decision, the ECJ has been asked to determine (a) whether such circumstances fall within the remit of freedom of establishment and (b) if so, is it contrary to freedom of establishment to deny claims for a tax loss incurred in another member state before the relocation of the claiming company? The Advocate General made three key findings. First, she confirmed that Aures relocation should fall within the scope of freedom of establishment. Second, and most importantly, she considered that whilst there was a restriction imposed by the Czech Republic, this restriction was justified on the basis of the balanced allocation of taxing powers. Third, she found that the restriction was proportionate as no less severe restriction was evident. It is also interesting to note that AG Kokott referenced the contentious nature of the Marks & Spencer decision, which led her to conclude that the principle contained therein (that a subsidiary or a permanent establishment's final losses could be used by the parent) should not be extended.
The DBKAG & K (CJEU) decision: an opportunity for investment funds?
On 17 June 2021, the European Court decided the joint cases K (C-58/20) and DBKAG (C-59/20) regarding whether the supply of certain services constituted the “management of special investment funds”, benefiting from the VAT exemption enshrined in Article 135(1)(g) of Council Directive 2006/112/EC.
Raising the bar: UK Supreme Court clarifies the requirements for HMRC to issue Follower Notices
On 2 July 2021, the Supreme Court delivered its judgment in R (on the application of Haworth) v HMRC  UKSC 25, finding unanimously in favour of the taxpayer and upholding the Court of Appeal’s decision to quash the follower notice issued to him.
The Danish Supreme Court decides the Fidelity case
The Fidelity case concerned claims brough by three undertakings for collective investment in transferable securities (UCITS) for the repayment of Danish withholding tax on dividends received from companies resident in Denmark between 2000 and 2009. The Supreme Court rejected the claims on the grounds that the Fidelity UCITS did not fulfil the conditions for the exemption provided by Danish law.
A yellow card for footballers and their agents……let’s bring in another match official
There has been long running tension between HMRC and the way that footballers and their agents are remunerated. As the Professional Footballers’ Association wade into the debate, Helen McGhee discusses the problems arising from agents’ fees and image rights.