According to an opinion by the Advocate General, the Danish rules on the possibilities of deducting losses of permanent establishment situated outside Denmark in a Danish company’s tax assessment are in conflict with EU law. Bech-Bruun, Taxand Denmark, explores.
On 18 January 2018, the Advocate General published his opinion in the matter of Brevola, C-650/16, in which he states that the fact that a Danish company may not deduct the losses of a permanent establishment situated in another Member State in connection with the closing of such permanent establishment is contrary to EU law rules.
The opinion of the Advocate General will most likely be acted on in the course of 2018, resulting in a final decision by the Court of Justice of the European Union (CJEU). Should the CJEU agree with the Advocate General, Danish tax law will be deemed contrary to EU law (restricting the freedom of establishment). Such situation will call for an amendment to applicable Danish tax laws; and such amendment to legislation may have an impact on all Danish companies with permanent establishments in other Member States. In case the CJEU rules in favour of the Danish company, it can result in a possibility for Danish companies with permanent establishments in other Member States to amend their tax assessments back in time.