Negative harmonization within the EU is an ongoing challenge that needs to be taken seriously. This is particularly evident in areas where it can be established that (legal) persons are faced with problems related to their cross-border activities and where there exist case law from the Court of Justice holding a key to a solution to the problem or at least parts of the problem. This is, for example, the case regarding the issue of treatment of losses in foreign group companies within the EU. Since the Marks & Spencer case, the negative integration process has evolved differently at the national level in Member States.
Approximately a year ago, Sweden introduced new rules regarding compensation of terminal losses in foreign subsidiaries. The rules are a consequence of the case law from the Court of Justice but also from the Swedish Supreme Administrative Court. The legislative process as well as the interpretation of the matter by the Swedish national courts raises several questions related to the negative integration process within the EU that will be dealt with in this article.EC Tax Review