CJEU – Recent Developments in Direct Taxation 2022

1. W AG (C-538/20)

1.1. Background

Ever since the landmark judgement in Marks & Spencer in 2005, cross-border losses have kept both the CJEU and tax experts busy. Despite various referrals of different Member States within the last 17 years, the debate on cross-border loss deduction is still ongoing. Colourful images are used to describe the problems accompanying the line of judgements. Brauner/Dourado/Traversa used the metaS. 130phor of the “original sin” to mark the 10-year anniversary of Marks & Spencer. AG Kokott even opined that “Marks & Spencer appears […] to be synonymous with chaos and despair”. After Bevola, Cordewener argued that “the ‘final losses’ doctrine is still alive”. By contrast, the Advocate General’s opinion in W AG made Kofler question whether final losses would “be alive much longer”.

In the following, we will argue (again) that despite the predominant scholarly opinion on the decisions on cross-border loss deduction, the case law on the issue is coherent. The importation of foreign losses into the residence State requires comparability and definitiveness. The latest CJEU judgement in W AG confirmed the importance of the comparability requirement.

1.2. Facts of the Case

The case referred to the Court in 2020 by the