CJEU Holds Danish Restriction on Offset of Losses of Non-Resident's Danish PE Violates Freedom of Establishment if No Other Possibility to Deduct

On 4 July 2018, a judgment of the Court of Justice of the European Union (CJEU) was issued concerning whether Denmark's loss restriction rules in relation to a permanent establishment (PE) in Denmark of a non-resident member of a group violates the EU freedom of establishment principle.

Under Danish law, the scope of national group (joint) taxation includes all companies and PEs belonging to the group that are established in Denmark. In respect of PEs in Denmark, however, a rule to prevent…