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cross-border loss relief

The availability of cross-border loss relief within the EU has been the subject of litigation in Marks & Spencer v Halsey (which was referred to the ECJ by the High Court) and by other companies under the loss relief Group Litigation Order (GLO). In December 2005 the ECJ ruled in the Marks & Spencer case that relief should be available for cross-border losses where they are unrelievable in their country of origin.

The Government included legislation incorporating the outcome of this case in the Finance Act 2006. It also introduced anti-avoidance legislation designed to prevent groups taking steps to render losses unrelievable in their country of origin.

It is unlikely that any UK company will be able to claim cross border group relief in the UK as the legislation is very tightly drawn. The European Commission has commenced infringement proceedings against the UK for failure to implement the ECJ’s decision in Marks and Spencer properly resulting in legislation that is still in breach of the EU law. The Commission has referred the UK to the CJEU (previously the ECJ), but it is not known when the case will be heard[1]

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