X. Swedish legislation exempting capital gains and excluding deduction of capital losses not in breach of freedom of establishment. Court of Justice

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Abstract

On 10 June 2015, the Court of Justice of the European Union (‘CJ’) delivered its judgment in X AB v. Skatteverket (C-686/13). The CJ held the non-deductibility for Swedish corporate tax purposes of realised foreign exchange losses on shareholdings eligible for relief under the Swedish participation exemption regime compatible with the fundamental freedoms. The case concerned a Swedish company that held a 45% shareholding in a UK subsidiary company whose shares were issued in US dollars. Due to a devaluation of the US dollar relative to the Swedish krona, the Swedish shareholder company would be confronted with a foreign exchange loss upon a disposal of its UK shareholding. Such a loss, however, would not be tax-deductible under the applicable Swedish tax rules. The CJ held such a treatment not to infringe the freedom of establishment, amongst others, because the non-deductibility would have been in place irrespective of whether the shareholding investment involved had been made in a Swedish company or in a company in another EU Member State.
Original languageEnglish
Pages (from-to)1-13
Number of pages13
JournalHighlights & Insights on European Taxation
Volume2015
Publication statusPublished - 2015

Court cases

TitleHighlights & Insights on European Taxation 2015
CourtCourt of Justice of the European Union
Date of judgement10/06/15

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