CJEU – Recent Developments in Direct Taxation 2015

I. S. 44The Case

The Danish CJEU case on direct taxation of 2015 is case C-593/14; Masco Denmark ApS and Damixa ApS v Ministry of Taxation. The case deals with the refusal to allow a Danish parent company a tax exemption for interest income received from an affiliated company within the same group established in Germany, even though the German company is not entitled to a tax deduction for the corresponding interest expenditure as a result of German rules on interest deduction limitation in the case of thin capitalization. The problem in relation to the freedom of establishment is that Denmark allows a resident parent company a tax exemption for interest income in cases where an affiliated company within the group that is resident in Denmark is not allowed a tax deduction for the corresponding interest expenditure as a result of the application of Danish rules on thin capitalization.

The case is a request for a preliminary ruling under Article 267 TFEU from the Western High Court (Vestre Landsret), regarding Article 43 EC (now Article 49 TFEU). The Danish private limited company (an anpartsselskab or ApS) Damixa ApS had financed its German subsidiary Damixa Armaturen GmbH with substantial...