E-7/23 - ExxonMobil Holding Norway AS v Staten v/Skatteetaten
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Deadlines: Motivation ministry: 17 August 2023
Written observations: 2 October 2023
Keywords: liquidation, taxable income, final losses
Subject: Agreement on the European Economic Area - Final Act - Joint Declarations - Declarations by the Governments of the Member States of the Community and the EFTA States - Arrangements - Agreed Minutes - Declarations by one or several of the Contracting Parties of the Agreement on the European Economic Area: articles 31 and 34.
Facts of the case:
The Appellant, EMHN, is a holding company for the ExxonMobil Group’s Norwegian operations and held 100% of the shares in EMD. At the end of 2011, EMD had losses and extensive restructuring measures were implemented. A decision to liquidate EMD was taken by the board of EMHN in 2012 and, on the same day, EMD was informed about the restructuring plan entailing the establishment of EMN, including the transfer of EMD’s activities to EMN and the associated liquidation of EMD. The board of EMHN then made a group contribution to cover part of the losses in EMD. In 2013, EMHN filed a tax return where the group contribution was deducted from the company’s general income for the fiscal year 2012. In 2014, the Tax Office adopted a decision revising EMHN’s tax assessment for the fiscal year 2012. In the decision, the deduction for the group contribution made to EMD was disallowed, with the consequence that the general income for 2012 increased. The main reason given for the refusal was that it was not possible to allow a deduction for a group contribution when EMD was resident in Denmark. The alternative ground for refusal was that there were no “final losses”. The validity of that decision is to be examined by the Court of Appeal.
Request for an advisory opinion:
1a: Is the application of the “final losses” exception as set out in the EFTA Court’s judgment in Case E-15/16 Yara and the case law referred to therein precluded where a subsidiary is in receipt of even minimal income in the fiscal year after the year for which a deduction is claimed, or must a specific assessment be conducted to determine whether the subsidiary’s continued income actually will reduce its losses, or that part of the losses for which a deduction is claimed?
1b: If the answer to question 1a is that a specific assessment must be conducted of the subsidiary’s continued income, the EFTA Court is requested to indicate how probable it must be that the income actually will reduce the losses, whether the amount of the reduction is of any significance and which factors will be of particular relevance in the assessment.
2: Is it compatible with Articles 31 and 34 of the EEA Agreement to require as a prerequisite for the application of the “final losses” exception that the liquidation process be formally decided on immediately after the end of the fiscal year for which a deduction is claimed?
Cited (recent) case-law: C-446/03; Case C-172/13; C-650/16; C-402 and C-432/07; Case E-15/16
Policy Area: EZK, FIN