CJEU judgement on the capital gains tax deferral in the case of an EU Merger

  • By:Corrieri Cilia Legal
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The decision taken by the CJEU in Société Euro Park Service (C-14/16) concerned both the freedom of establishment under the TFEU and the EU Merger Directive. The court judgement encompassed whether former authorisation from tax administrator was required to defer taxation of capital gains on a cross-border merger within the EU, under which the taxpayer must show that such merger has an effective commercial reasons and is not executed for the purposes of tax evasion or tax avoidance.

The French provision was implemented for the transposition of the derogation stipulated in Article 11(1)(a) of the Directive, which permits Member States to prohibit tax deferral under the Directive in cases of tax evasion or tax avoidance. The Court held that the derogation, as it is an exception to the general rule, ought to be interpreted restrictively and that the French provision went beyond what is essential to avoid tax evasion and tax avoidance and hence it is not compliant with the freedom of establishment and the Directive.


Posted in: International Taxation