Press Release: Direct taxation: Infringement proceeding against Germany for its discriminatory rules applied to cross-border loss offset

The European Commission has formally requested Germany to modify its legislation on cross-border loss deduction which the Commission considers incompatible with the principle of freedom of establishment and the free movement of capital in the Single Market. The request takes the form of a ‘reasoned opinion’ (second step of the infringement procedure provided for in article 226 of the EC Treaty). If the relevant national legislations are not amended in order to comply with the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.