The Never-Ending Issue of Cross-Border Loss Compensation within the EU: Reconciling Balanced Allocation of Taxing Rights and Cross-Border Ability-to-Pay

Abstract:

Although the case-law on cross-border loss offsetting has been developed by the European Court of Justice (ECJ), to date, only on the bases of fundamental freedoms, and has been oscillating between a global approach and a single-country approach, these two approaches could be reconciled with a view to an ultimate concern to avoid tax evasion and tax avoidance within the EU territory. Moreover, this concern would be fully consistent with the development of an EU law principle of ability-to-pay, which could arguably be applied, inter alia, through a fractional deduction of cross-border losses in each Member State even for those taxpayers not falling within the Common Consolidated Corporate Tax Base (CCCTB) project, to the benefit of both balanced allocation of taxing rights and taxpayers’ interests.