ECJ - Recent Developments in Direct Taxation 2012

S. 249United Kingdom – Infringement Actions

S. 2511. Introduction

There are currently four pending infringement actions against the UK relating to direct taxation which have been announced by the Commission and have reached the stage where the matter is being referred to the European Court. These four infringement actions are:

• IP/12/1017 – on cross-border loss relief.

• IP/12/64 – on limitation periods for actions arising from a mistake of law.

• IP/12/1146 – on capital gains of controlled companies.

• IP/12/1147 – on the transfer of assets abroad legislation.

These four infringement actions are discussed in that order below.

2. Cross-border loss relief

The European Court issued its judgment in the Marks & Spencer loss relief case on 13 December 2005. At the time of writing, various issues relating to the implementation of that judgment are still being litigated in the United Kingdom.

However, in Schedule 1 to the Finance Act 2006 the UK introduced a limited measure for cross-border loss relief under which losses arising in another Member State could be surrendered and used to offset profits in the United Kingdom if there was no possibility that the losses might be used outside the United Kingdom. The Commiss...