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23 August 2007
Categories: Tax cases , Companies

Limited freedom

A Finnish company which was wholly owned by a company established in the UK made a transfer to the parent company. It was ruled that an intra group financial transfer was not tax deductible under Finnish law when made to a parent company in a different EC state. Such a transfer within Finnish companies both resident in Finland would be allowable.
The claimant appealed saying that this went against article 43 of the EC Treaty which referred to the freedom of establishment.

Limited freedom

A Finnish company which was wholly owned by a company established in the UK made a transfer to the parent company. It was ruled that an intra group financial transfer was not tax deductible under Finnish law when made to a parent company in a different EC state. Such a transfer within Finnish companies both resident in Finland would be allowable.
The claimant appealed saying that this went against article 43 of the EC Treaty which referred to the freedom of establishment.
The European Court of Justice ruled that the Finnish law not allowing a tax deduction for such an intra group financial transfer was discriminatory unless it could be justified on the grounds of public interest. In this instance to allow such intra group cross-border transfers could give rise to Member States choosing freely the Member State in which a subsidiary's profits were...

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