Inter-country Equity and Intra-group Transactions at EU Level: An Analysis of the CCCTB Proposal and ECJ Tax Cases

The article looks at the erosion of national corporate tax bases achieved through intra-group transactions involving affiliated companies located in different Member States. This issue has been addressed by the ECJ in a set of cases which constitute an evolution of the traditional jurisprudence on direct taxes that has mainly dealt with the issues of discrimination and restriction on freedom of establishment and on the free movement of workers, capitals, services.

The article first addresses the group cases in which the Court initially considered from an host country perspective the intra-group transactions between affiliated companies in connection to payments of intra-group interest in the context of the so-called thin-capitalization cases. The article then discusses the group cases in which the Court extended the host country analysis to intra-group profit transfers that can be made under group contribution regimes, or that are carried out through intra-group allocations of financial costs.

The article then addresses the group cases decided by the Court from a home country perspective that involved recognition by the parent company of tax situations of foreign-controlled companies. Finally the article verifies how the recent CCCTB Proposal impacts on the rules relating to intra-group transactions that derive from the case law of the ECJ as discussed in the article.