Forum Contrributions: Does National Group Taxation Legislation Breach EU Law if the Parent Company is Required to Hold Shares in the Foreign Subsidiary Through a Permanent Establishment in the Host Country?

This article examines, on the basis of the pending ECJ Case C-592/24, Société Générale, whether the requirement that the shareholding in the foreign subsidiary be attributed to a permanent establishment of the parent company in the foreign host state may infringe the freedom of establishment (Articles 49 and 54 TFEU). This legal requirement effectively excludes a nonresident parent company with resident subsidiaries from establishing such a group tax regime in the foreign host state or makes such formation significantly more difficult compared to a domestic group with a resident parent company, where this criterion is regularly met automatically. Insofar as a nonresident parent company with resident subsidiaries is excluded by the national rules of the foreign host Member State from forming a group tax regime there, which comprises only domestic entities and permanent establishments, such a foreign group also loses secondary tax advantages beyond the ongoing consolidation of profits, which are linked to the existence of such group taxation, such as exemption from the interest deduction limitation in the case of intragroup debt financing. This may infringe the freedom of establishment. Furthermore, the Opinion of the Advocate General in Case C-592/24 is subject to critical analysis and examination