The case had been returned to the Dutch court for a final decision. On 22 February 2018, the CJEU ruled on two joined cases referred by the Dutch Supreme Court. One case involved the anti-profit shifting rules and the other the deduction of currency losses. The CJEU held that the Netherlands cannot apply rules (e.g. anti‑profit shifting rules) that generally are applied in both domestic and cross-border situations, but whose effect is more advantageous by entering into a fiscal unity. Since a fiscal unity is available only to Dutch resident companies, the more advantageous treatment is limited to domestic situations.

The CJEU concluded that the Netherlands may not deny certain benefits (“elements”) of the fiscal unity regime in EU situations simply because EU-resident companies are not allowed to be included in a fiscal unity and, therefore, the anti-profit shifting rules are incompatible with the freedom of establishment principle in the Treaty on the Functioning of the European Union. The CJEU held that the rules relating to currency losses are compatible with EU law. The Supreme Court has now confirmed the CJEU decision, putting an end to the debate on the per element approach.

The article is part of dReport – December 2018, Tax news; Grants and investment Incentives.