International Taxation
Court of Justice of European Union decision reinforces position for horizontal tax consolidation in Spain
The Court of Justice of the European Union (CJEU) issued its final decision in the joint cases C-39/13, C-40/13 and C-41/13, concluding that the Dutch tax consolidation regime is not compatible with the EU freedom of establishment. The decision of the CJEU confirms the position held by Advocate General Kokott in her conclusions issued on February 27. This decision is in line with the Papillon case, the X Case and the Felixstowe case; more importantly, this is the first time that the CJEU addresses so-called «horizontal tax consolidation.» Spanish domestic rules governing the tax consolidation regime are very similar to the Dutch rules and do not allow «horizontal tax consolidation;» i.e., two Spanish companies having a common EU shareholder cannot form a Spanish tax consolidation group. In light of the CJEU decision, Spanish domestic rules governing tax consolidation groups will now have to be amended to allow for horizontal tax consolidation.