Cauza C-446/03, Marks & Spencer
Case C-446/03, Marks & Spencer

Summary/Abstract: The Marks & Spencer case-law exemplifies how the taxation of profits in the case of groups of companies can constitute an obstacle in the exercise of their freedom of establishment, by influencing the decision regarding the choice of the place of establishment of subsidiaries, depending on the tax advantages offered by the tax regime applicable on the territory of a Member State. The Court’s decision in this case is also of practical importance from the perspective of the reasons that Member States can invoke and that can justify the application of a discriminatory taxation system regarding the deduction of losses recorded by resident or, as the case may be, non-resident subsidiaries of a parent company established in a certain Member State. The Court held that the reduction of tax revenues of a state cannot constitute a valid reason for the application of discriminatory taxation. On the other hand, maintaining the distribution of taxing power between the Member States, the avoidance of the double deduction of losses attributed to subsidiaries or preventing tax evasion may constitute valid reasons for the application of a differentiated tax regime. The national measures adopted in the context must, however, constitute imperative reasons of general interest, be able to guarantee the achievement of the mentioned objectives and the restrictive measures must not exceed what is necessary in order to achieve the objectives pursued.

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