Wide standing to invoke fundamental EU freedom of establishment

07/09/12

On 6 September 2012, the European Court of Justice handed down judgment in Case C-18/11 The Commissioners for Her Majesty's Revenue & Customs v Philips Electronics UK Ltd.

The case was a reference from the Upper Tribunal (tax) and concerned the application of section 403D(1)(c) of the Income and Corporation Taxes Act 1988, a provision which, in summary, precludes the use of losses for consortium tax relief where such losses may be available for use overseas. In its judgment, the ECJ held that the provision was an unjustified restriction on the freedom of a non‑resident company to establish itself in another Member State and, as such, contrary to Article 43 EC (now Article 49 TFEU). The ECJ held that the restrictive provision could not be justified on the basis of the objective of preventing the double use of losses in circumstances where, in summary, the losses in question were incurred in the UK and to be set against UK profits.

The UK Government argued that Philips Electronics UK Ltd could not, in any event, rely upon Article 43 EC because that company had not been itself involved in any cross-border establishment to or from another Member State. The ECJ did not accept this argument, holding that, in the circumstances, the national court was obliged to disapply any provision of national legislation which was contrary to Article 43 EC.

The judgment is here.