Non-Discrimination in European and Tax Treaty Law

I. S. 106Introduction

A. Tensions between Different Perspectives regarding Loss Utilization

The question of cross-border losses and their tax treatment is of great importance not only for taxpayers, but for the European Union as a whole and the Member States as well. This is even more the case in times of economic crisis such as the one we are facing now. However, in the area of cross-border loss relief we witness a divergence in the taxpayer’s perspective with regard to the role of losses, on the one hand, and the corresponding perspective of the Member States, on the other. Additionally, it is possible to ascertain a separate perspective of the European Union as a whole, distinct from the views of its Member States.

Regarding the taxpayer, it is in his interest to have both domestic and foreign losses taken into account, as for him they are a tool for minimizing tax liability. Loss relief will assure taxation which is in line with the ability-to-pay principle, since “losses are an essential part of defining the taxable base”. From the taxpayer’s point of view, it is most beneficial to have the losses taken into account as soon as they are incurred. On the other hand, Member States are int...