This Bachelor’s thesis focuses on those terms that, from a Swedish perspective, have to be fulfilled to entitle deduction for definitive losses in a cross-border merger situation. The thesis analyses one of the ten rulings from the Swedish Supreme Administrative Court which were published in 2009.The ruling is analysed in the light of the Treaty on the Functioning of the European Union, the merger directive and the Court of Justice rulings in Marks & Spencer and Lidl. The purpose is to examine if the Swedish rules concerning cross-border mergers is compatible with the EU-law. The Swedish rules concerning mergers are found in chapter 37 in the Swedish income tax act. To enjoy the rights of the rules in chapter 37 the merger needs to be qualified. The criterion in 11 § stands out as a clear obstacle for the deduction of losses and is therefore examined thoroughly. It states that the transferor company needs to be taxable for some kind of activity in Sweden immediately before the merger. That criterion is not fulfilled if the company is situated in another member state. In the Marks & Spencer case, the Court of Justice stated that a rule which hinders deduction for losses which is considered to be definitive could be a possible breach of the freedom of establishment. The Swedish rules concerning qualified mergers in chapter 37 in the Swedish income tax act was questioned in the case RÅ 2009 ref 13. The criterion stated in § 11 was discussed first by the Swedish tax board and then by the Swedish Supreme Administrative Court as a possible breach of the freedom of establishment. It is in my opinion clear that when a loss is definitive the loss should be entitled to deduction, thus the 11 § could therefore constitute a breach of the freedom of establishment.

Due to constant expansion of the European Community, the harmonization in the fields of European company law and development of internal European market have emerged into considerably bigger and more complex issues. Aspects of corporate mobility, having a direct simultaneous connection to the right of freedom of establishment, have been one of the most problematic spheres for reaching international consensus. Despite numerous directives adopted by Member States (MS) European undertakings continue to be regulated by national legislations. The idea of a common European limited liability company, sc. Societas Europaea (SE), was put into process of realization in order to facilitate the internal trade and to help multinational companies to obtain legal certainty and trans-European character by rising above the variety of national legislations. Furthermore, the SE was to make cross-border enterprise management more flexible and less bureaucratic and to help improving the general competitiveness of Community enterprises. The process of formation of the European Company Statue took over forty years and the result of the final adoption turned out to be something completely different from the es-sential idea of the European Company. Due to the historical, socio-political and legal dif-ferences MSs had difficulties with compromising on the majority of aspects and instead of one common SE form, the Community had basically adopted 28 different alternatives, loosing the original valuable supranational character. The strongest advantage of the SE are the rights conferred to it by the Regulation. The frequent use of renvoi technique undermines this aspect of SE’s precedence over national legislation. The true potential of the European Company remains thus highly theoretical and the current shape of the SE presents only a weak alternative to the national corporate forms of the MSs. A European Company cannot be freely incorporated solely by investment of private capi-tal. There is a need for existence of at least two legal enterprises which furthermore must fall under the scope of different national legislations. In other words in order to create an SE, the definite cross-border element between companies at hand must be visible or can be identified. It can be formed by means of merger, creation of a holding, incorporation of a subsidiary or conversion. The subscribed capital for the SE shall at its minimum equal €120 000. The Council Regulation on SE provides a flexible management regime, permit-ting companies to choose between two administration systems (one-tier/two-tier) that exist in the Community. The issues of employee involvement are regulated in separate directive that is a supplement to the Regulation. Despite the recent developments of freedom of establishment through the case-law, the matter remains utterly complicated. The SE may seem on one hand as a logical solution, being able to incorporate in different MSs, to merge or to form a holding without burden-some processes of winding-up and re-incorporation. On the other hand the Regulation re-stricts the mobility of the SE by provisions prohibiting location of registered and head of-fice of the company in different MSs, depriving it thus from one of the basic Community freedoms. Prudent attitude to mobility and aspiration to protect national interests have partly diminished essential advantages of the SE. It appears to be impossible to conduct business in one MS while being registered in another. Possible amendments are awaited shortly, but so far the SE has definitely not achieved many of practical goals considering mobility and has fulfilled very few of its important theoretical expectations. National perspective on the adoption of the SE seems to be relatively positive, accepting the theoretical advantages of corporate mobility, options of structure and management and possibility to obtain an essentially European trademark. However, there is also an amount of skepticism addressed to deficient practical functioning due to the lack of uniform legislation. European organizations and companies tend to have a slightly more cautious and restrained approach. The idea of a European Company is praised more for its genuinely European character. Representatives for established SEs prefer to talk about internationalization of trade, European recognition, enhanced competitiveness and market integration, while very little speaks about the true practical potential. The SE is furthermore often observed as a useful but still mainly theoretical legal instrument, playing an indispensable part in the overall development of European company law. Political motives seem to be considerably heavier while discussing the question of necessity of adoption that later attracted so little interest. Additionally, the basic idea of the SE also seems to include definite measures for general European unification, granting SE the symbolic value of commonly European enterprise. Consequently, failing in purely practical application in the absence of a clear need for common limited liability company, the SE has its theoretical and crucially important socio-psychological purposes.

CFC legislation has become an instrument to protect national tax bases and minimize the abusive effects of international tax planning. The Swedish CFC legislation is found in chapter 39a of the ITA whereas it is established under what circumstances CFC taxation can arise. If a shareholder of a foreign legal entity is liable of CFC taxation in Sweden such a holder is also entitled to deduct tax paid by the CFC abroad. The purpose of the granted tax credit is to avoid double taxation, although if foreign tax is paid by another entity than the foreign entity in question such CFC-tax cannot be credited. The situation at hand can result in that the holder is liable of paying double CFC tax, contrary to the purpose of tax credit. The freedom of establishment is part of the fundamental freedoms concluded in the EC Treaty. The general goal of the Community is to establish an internal market. The freedom of establishment, stated in Article 43 EC stipulates that restrictions on the freedom of establishment on nationals shall be prohibited. However, restrictions on the freedom of establishment can be justified under certain circumstances. The ECJ has developed a rule of reason test which can justify prohibited restrictions if certain criterias are fulfilled. Concerning tax matters the grounds of justification that have been accepted by the ECJ are the cohesion of the tax system, the effectiveness of fiscal supervision, the counteraction of tax avoidance, the need to safeguard the balanced allocation of the power to tax between the Member States and a combination of grounds of justification. An exemplification scheme serves as a mean to illustrate in what instance double CFC taxation can arise. The scheme concerns a corporate group whereas a Swedish parent company owns a subsidiary in the U.K. through which the parent company plans to establish another subsidiary in the UAE. Swedish tax legislation provides that the Swedish parent company is subject to corporation tax on its worldwide profits in Sweden. However, the parent company is generally not taxed on the profits of its subsidiaries as they arise nor is it taxed on dividends distributed by a subsidiary established in Sweden. Although, when subsidiaries are not resident in Sweden and CFC legislation applies tax exempt according to the intercorporate share holding legislation will not be applicable. Therefore, in order for double CFC taxation to arise it is established that CFC legislation will be applicable to the exemplified scheme. Profits accrued in the UAE will be subject to CFC taxation in both the U.K. and Sweden and double taxation relief will not be granted in Sweden for the CFC tax paid in the U.K. It is questionable if double CFC taxation and the lack of tax relief in such a situation is in compliance with the freedom of establishment. The analysis, whereas the purpose of this thesis is concluded, follows the reasoning of the ECJ in accordance with the rule of reason. The purpose is to examine if the lack of double CFC tax relief is in compliance with Community law. It is established that since relief is not granted for double CFC taxation, national legislation hinders the freedom of establishment by forcing a parent company to avoid or modify an intra group structure which leads to the unfavorable consequences in taxation. The tax disadvantage must be seen as making it less attractive for Sweden’s own resident to establish in another Member State and the hindering nature of the lack of double CFC taxation relief constitutes a prohibited restriction to the freedom of establishment. The grounds of justification previously accepted by the ECJ are examined in order to establish if such grounds can justify the lack of double CFC tax relief as a prohibited restriction on the freedom of establishment. None of the acknowledged grounds of justification are able to justify the lack of double CFC tax relief and such a restricted measure is therefore not found to be in compliance with Community Law. Lastly, potential adjustments to CFC legislation, regarding the lack of double CFC tax relief, are discussed to enable compliance with Community law.

Den internationella rätten utgörs av mellanstatliga samarbeten mellan suveräna stater på olika områden. De suveräna staterna har exklusiv behörighet att lagstifta inom sina territorier och således har ingen annan stat rätt att stifta lagar som blir gällande på en annans stats territorium. Denna exklusiva rätt till självbestämmande benämns territorialitetsprincipen. På den internationella skatterättens område innebär territorialitetsprincipen att en stat har rätt att beskatta all inkomst som har ett samband med den staten. Detta görs genom att obegränsat skattskyldiga beskattas för all sin inkomst oavsett var den uppstått och begränsat skattskyldiga beskattas endast för den inkomst som uppkommit i den staten. Då en självständig stat överlämnar en del av sin suveränitet till ett sådant internationellt samarbete som till exempel EG utgör, splittras det i internationell rätt vedertagna territorialitetsbegreppet eftersom den exklusiva lagstiftningskompetensen i viss mån måste delas med EG: s lagstiftande makt. Etableringsfriheten som stadgas i artiklarna 43 EG och 48 EG utgör en del av de åtaganden som medlemsstaterna måste beakta efter inträdet i EG. Medlemsstaterna får därigenom inte i sin nationella lagstiftning ha åtgärder som inskränker gemenskapsmedborgares och bolags rätt till fri etablering. Med tanke på att beaktandet av EG-rätten föranleder att territorialitetsbegreppet splittras kan det ifrågasättas om territorialitetsprincipen har någon ställning i EG-rätten. Härav är det även av intresse att utreda hu-ruvida territorialitetsprincipen kan utgöra en självständig rättfärdigandegrund av nationellt inskränkande åtgärder som anses strida mot etableringsfriheten. Trots att det råder osäkerhet kring huruvida territorialitetsprincipen utgör en självständig rättfärdigandegrund eller inte åberopar medlemsstater principen på grund av att EG-domstolen erkänt principen i ett mål rörande etableringsfrihet. Därav kan territorialitetsprincipens ställning som rättfärdigandegrund inte enkelt avfärdas. Vi anser dock inte att territorialitetsprincipen har en ställning som självständig rättfärdigandegrund av nationell lagstiftning som inskränker etableringsfriheten i artiklarna 43 EG och 48 EG. Territorialitetsprincipen fördelar enbart upp beskattningsbehörigheten mellan medlemsstaterna och har enligt oss samma definition inom EG-rätten som den har i den internationella skatterätten. På grund av att territorialitetsprincipen i internationell skatterätt endast används för att definiera en stats beskattningsbehörighet anser vi att principen inte går att använda som stöd för att neka en gemenskapsmedborgare eller ett bolag en skatteförmån enbart med hänvisning till principen. / International law is composed by cooperation between sovereign states within different areas. Sovereign states have the power to legislate within their territories and because of this no other state can make binding laws on another state’s territory. This sovereign right to legislate is known as the principle of territoriality. Within international tax law the principle of territoriality means that a state has the right to taxation within its territory on all income related to that state. This means that those liable to full taxation are taxed on all their income regardless of where the income is earned and those liable to limited taxation are only taxed on income earned in that particular state. When a sovereign state gives up parts of its sovereignty to the European Community (EC), which is a part of the international cooperation among states, the concept of territoriality is fragmentized since the exclusive legislative power that a state holds must be shared with the legislative power of the EC. The freedom of establishment in articles 43 EC and 48 EC must be respected by the Member States since they through the admission of the EC granted that they would not apply laws that restricted the right for community citizens and companies to establish themselves in other member states than their own. With the limitation of the state’s sovereignty the term of territoriality becomes vaguer and it can be ques-tioned if the principle of territoriality has a position within EC law. It is also interesting to examine whether the principle can be seen as a justification for national law that is in conflict with the freedom of establishment or not. Even though there is some uncertainty whether the principle of territoriality can be seen as a valid justification or not the member states are still trying to invoke it. Since the European Court of Justice recognized the principle of territoriality in a case concerning the right to freedom of establishment it can not easily be dismissed. We do not, however, consider the principle of territoriality to be an independent justification for laws that are in conflict with the freedom of establishment in articles 43 EC and 48 EC. We believe that the principle only attributes the right to taxation between the Member States and that the principle is defined as in international tax law. Because the principle is given this definition it can only be used to define a states ability to taxation. We believe that the principle can not be relied upon to deny a Community citizen or a company a right to a tax relief.

Den första svenska CFC-lagstiftningen trädde i kraft den 1 januari 1990 och har sedan dess genomgått flera omarbetningar. Syftet med de svenska CFC-reglerna är att förhindra skatteplanering med bolag i lågbeskattade länder och på så sätt försvara den svenska skattebasen. I kort innebär de svenska CFC-reglerna en möjlighet att beskatta ägaren till ett i utlandet beläget CFC-bolag löpande för dess inkomster från CFC-bolaget. EG-domstolens dom Cadbury Schweppes föranledde att flera av medlemsländerna, däribland Sverige tvingades ändra sina CFC-lagstiftningar. EG-domstolen konstaterade att CFC-lagstiftning utgör en inskränkning av etableringsfriheten och skall förbjudas såvida CFC-bolaget inte utgör ett rent konstlat upplägg och då etableringen sker i syfte att undvika nationell skatt. CFC-beskattning får inte vidtas om det kan visas att det föreligger en verklig etablering från vilken det bedrivs en faktisk ekonomisk verksamhet. Bedömningen om en sådan etablering föreligger, skall grundas på objektiva omständigheter som kan kontrolleras av utomstående, däribland i vilken grad CFC-bolaget existerar fysiskt i form av lokaler, personal och utrustning. Den svenska regeringen valde att införliva utgången av målet genom en ny kompletteringsregel i 39a kap. 7a § IL. Regeringen valde att formulera lagstiftningen som att en inkomst hos en utländsk juridisk person som hör hemma i en stat inom Europeiska ekonomiska samarbetsområdet inte anses lågbeskattad om den utländska juridiska personen i den stat där den hör hemma utgör en verklig etablering från vilken en affärsmässigt motiverad verksamhet bedrivs. För att göra denna prövning listar regeringen tre omständigheter som särskilt skall beaktas. Den utländska juridiska personen skall för det första förfoga över egna resurser i form av i form av lokaler och utrustning i den utsträckning som är nödvändig för dess verksamhet. För det andra skall den förfoga över personal med den kompetens som är nödvändig för att självständigt bedriva verksamheten och slutligen skall den utländska juridiska personens personal självständigt fatta beslut i den löpande verksamheten. Formuleringen av lagstiftningen har fått mycket kritik i förarbetena och i doktrinen framförallt eftersom den svenska lagstiftningens formulering avviker från EG-domstolens formulering i domen. Magisteruppsatsen syftar till att utreda och analysera den nya kompletteringsregelns i 39a kap. 7a § IL förenlighet med etableringsfriheten med särskilt beaktande av utgången i målet Cadbury Schweppes. Dessutom kommer eventuella tillämpnings- och tolkningsproblem att klargöras och analyseras. Slutsatsen är att den nya kompletteringsregeln löper stor risk att anses som oförenlig med etableringsfriheten samt att formuleringen skapar tolkningsproblem och väcker osäkerhet inför framtida tillämpning. Eftersom den nya kompletteringsregeln syftar till att förena den svenska CFC-lagstiftningen med EG-rätten borde det mest förnuftiga istället varit att den nya kompletteringsregeln endast innehöll grundelementen som kommer till uttryck i EG-rättens dom, medan detaljerna istället överlåts till rättsutvecklingen. / The first Swedish CFC legislation came into force on January 1st 1990 and has since undergone several revisions. The purpose of the Swedish CFC rules is to prevent tax avoidance by companies located in low tax countries and thus defend the Swedish tax base. In short, the Swedish CFC legislation implies an opportunity to tax the owner of a foreign located CFC of its revenue from the CFC. The ECJs ruling in the Cadbury Schweppes case caused several of the member states, including Sweden to change its CFC legislation. The ECJ ruled that the CFC legislation constitutes a restriction on the Freedom of Establishment and should be prohibited unless the CFC does not constitute a wholly artificial arrangement intended to escape the national tax normally payable. CFC-taxation may not be made if it is proved that there is an actual establishment intended to carry on a genuine economic activity. The finding if such an establishment exists must be based on objective factors which are ascertainable by third parties with regard, in particular, to the extent to which the CFC physically exists in terms of premises, staff and equipment. The Swedish government chose to incorporate the outcome of the ruling by implementing a new CFC-legislation - 39a. 7a § IL. The government chose to formulate the legislation so an income of a foreign legal entity which belongs in a state within the European Economic Area is not considered to be low taxed if the foreign legal entity in the home State is an actual establishment from which a commercially motivated business is managed. To make this finding, the government lists three factors that require specific consideration. The foreign legal entity must according to the first factor have their own resources in the form of in the form of premises and equipment to the extent necessary for its activities. The second factor sates that the control of staff with the skills necessary to independently carry out the activity and finally shall the staff independently make decisions in the ongoing activities. The wording of the legislation has received much criticism in the preparatory work and in the literature especially since the wording of the Swedish legislation differs from the one made by the ECJ. This Master's thesis aims to investigate and analyze the new Swedish CFC-legislation in 39a. kap. 7a § IL and to analyze if it is compatible with the Freedom of Establishment with specific regard to the outcome of the Cadbury Schweppes case. Moreover, any application or interpretation problems will be clarified and analyzed. The conclusion is that the new Swedish CFC legislation threatens to be incoherent with the freedom of establishment and that the wording creates problems of interpretation and raises uncertainty about the future application. As the new CFC legislation intends to reconcile the Swedish CFC legislation with EC law it should be more reasonable if the new rule only contained the basic elements as reflected in the ruling, while details instead were left to the legislative development.

<p>Due to constant expansion of the European Community, the harmonization in the fields of European company law and development of internal European market have emerged into considerably bigger and more complex issues. Aspects of corporate mobility, having a direct simultaneous connection to the right of freedom of establishment, have been one of the most problematic spheres for reaching international consensus. Despite numerous directives adopted by Member States (MS) European undertakings continue to be regulated by national legislations. The idea of a common European limited liability company, sc. Societas Europaea (SE), was put into process of realization in order to facilitate the internal trade and to help multinational companies to obtain legal certainty and trans-European character by rising above the variety of national legislations. Furthermore, the SE was to make cross-border enterprise management more flexible and less bureaucratic and to help improving the general competitiveness of Community enterprises.</p><p>The process of formation of the European Company Statue took over forty years and the result of the final adoption turned out to be something completely different from the es-sential idea of the European Company. Due to the historical, socio-political and legal dif-ferences MSs had difficulties with compromising on the majority of aspects and instead of one common SE form, the Community had basically adopted 28 different alternatives, loosing the original valuable supranational character. The strongest advantage of the SE are the rights conferred to it by the Regulation. The frequent use of renvoi technique undermines this aspect of SE’s precedence over national legislation. The true potential of the European Company remains thus highly theoretical and the current shape of the SE presents only a weak alternative to the national corporate forms of the MSs.</p><p>A European Company cannot be freely incorporated solely by investment of private capi-tal. There is a need for existence of at least two legal enterprises which furthermore must fall under the scope of different national legislations. In other words in order to create an SE, the definite cross-border element between companies at hand must be visible or can be identified. It can be formed by means of merger, creation of a holding, incorporation of a subsidiary or conversion. The subscribed capital for the SE shall at its minimum equal €120 000. The Council Regulation on SE provides a flexible management regime, permit-ting companies to choose between two administration systems (one-tier/two-tier) that exist in the Community. The issues of employee involvement are regulated in separate directive that is a supplement to the Regulation.</p><p>Despite the recent developments of freedom of establishment through the case-law, the matter remains utterly complicated. The SE may seem on one hand as a logical solution, being able to incorporate in different MSs, to merge or to form a holding without burden-some processes of winding-up and re-incorporation. On the other hand the Regulation re-stricts the mobility of the SE by provisions prohibiting location of registered and head of-fice of the company in different MSs, depriving it thus from one of the basic Community freedoms. Prudent attitude to mobility and aspiration to protect national interests have partly diminished essential advantages of the SE. It appears to be impossible to conduct business in one MS while being registered in another. Possible amendments are awaited shortly, but so far the SE has definitely not achieved many of practical goals considering mobility and has fulfilled very few of its important theoretical expectations.</p><p>National perspective on the adoption of the SE seems to be relatively positive, accepting the theoretical advantages of corporate mobility, options of structure and management and possibility to obtain an essentially European trademark. However, there is also an amount of skepticism addressed to deficient practical functioning due to the lack of uniform legislation. European organizations and companies tend to have a slightly more cautious and restrained approach. The idea of a European Company is praised more for its genuinely European character. Representatives for established SEs prefer to talk about internationalization of trade, European recognition, enhanced competitiveness and market integration, while very little speaks about the true practical potential. The SE is furthermore often observed as a useful but still mainly theoretical legal instrument, playing an indispensable part in the overall development of European company law.</p><p>Political motives seem to be considerably heavier while discussing the question of necessity of adoption that later attracted so little interest. Additionally, the basic idea of the SE also seems to include definite measures for general European unification, granting SE the symbolic value of commonly European enterprise. Consequently, failing in purely practical application in the absence of a clear need for common limited liability company, the SE has its theoretical and crucially important socio-psychological purposes.</p>

<p>CFC legislation has become an instrument to protect national tax bases and minimize the abusive effects of international tax planning. The Swedish CFC legislation is found in chapter 39a of the ITA whereas it is established under what circumstances CFC taxation can arise. If a shareholder of a foreign legal entity is liable of CFC taxation in Sweden such a holder is also entitled to deduct tax paid by the CFC abroad. The purpose of the granted tax credit is to avoid double taxation, although if foreign tax is paid by another entity than the foreign entity in question such CFC-tax cannot be credited. The situation at hand can result in that the holder is liable of paying double CFC tax, contrary to the purpose of tax credit.</p><p>The freedom of establishment is part of the fundamental freedoms concluded in the EC Treaty. The general goal of the Community is to establish an internal market. The freedom of establishment, stated in Article 43 EC stipulates that restrictions on the freedom of establishment on nationals shall be prohibited. However, restrictions on the freedom of establishment can be justified under certain circumstances. The ECJ has developed a rule of reason test which can justify prohibited restrictions if certain criterias are fulfilled. Concerning tax matters the grounds of justification that have been accepted by the ECJ are the cohesion of the tax system, the effectiveness of fiscal supervision, the counteraction of tax avoidance, the need to safeguard the balanced allocation of the power to tax between the Member States and a combination of grounds of justification.</p><p>An exemplification scheme serves as a mean to illustrate in what instance double CFC taxation can arise. The scheme concerns a corporate group whereas a Swedish parent company owns a subsidiary in the U.K. through which the parent company plans to establish another subsidiary in the UAE. Swedish tax legislation provides that the Swedish parent company is subject to corporation tax on its worldwide profits in Sweden. However, the parent company is generally not taxed on the profits of its subsidiaries as they arise nor is it taxed on dividends distributed by a subsidiary established in Sweden. Although, when subsidiaries are not resident in Sweden and CFC legislation applies tax exempt according to the intercorporate share holding legislation will not be applicable. Therefore, in order for double CFC taxation to arise it is established that CFC legislation will be applicable to the exemplified scheme. Profits accrued in the UAE will be subject to CFC taxation in both the U.K. and Sweden and double taxation relief will not be granted in Sweden for the CFC tax paid in the U.K. It is questionable if double CFC taxation and the lack of tax relief in such a situation is in compliance with the freedom of establishment.</p><p>The analysis, whereas the purpose of this thesis is concluded, follows the reasoning of the ECJ in accordance with the rule of reason. The purpose is to examine if the lack of double CFC tax relief is in compliance with Community law. It is established that since relief is not granted for double CFC taxation, national legislation hinders the freedom of establishment by forcing a parent company to avoid or modify an intra group structure which leads to the unfavorable consequences in taxation. The tax disadvantage must be seen as making it less attractive for Sweden’s own resident to establish in another Member State and the hindering nature of the lack of double CFC taxation relief constitutes a prohibited restriction to the freedom of establishment. The grounds of justification previously accepted by the ECJ are examined in order to establish if such grounds can justify the lack of double CFC tax relief as a prohibited restriction on the freedom of establishment. None of the acknowledged grounds of justification are able to justify the lack of double CFC tax relief and such a restricted measure is therefore not found to be in compliance with Community Law. Lastly, potential adjustments to CFC legislation, regarding the lack of double CFC tax relief, are discussed to enable compliance with Community law.</p>

<p>This Bachelor’s thesis focuses on those terms that, from a Swedish perspective, have to be fulfilled to entitle deduction for definitive losses in a cross-border merger situation. The thesis analyses one of the ten rulings from the Swedish Supreme Administrative Court which were published in 2009.The ruling is analysed in the light of the Treaty on the Functioning of the European Union, the merger directive and the Court of Justice rulings in Marks & Spencer and Lidl. The purpose is to examine if the Swedish rules concerning cross-border mergers is compatible with the EU-law. The Swedish rules concerning mergers are found in chapter 37 in the Swedish income tax act. To enjoy the rights of the rules in chapter 37 the merger needs to be qualified. The criterion in 11 § stands out as a clear obstacle for the deduction of losses and is therefore examined thoroughly. It states that the transferor company needs to be taxable for some kind of activity in Sweden immediately before the merger. That criterion is not fulfilled if the company is situated in another member state. In the Marks & Spencer case, the Court of Justice stated that a rule which hinders deduction for losses which is considered to be definitive could be a possible breach of the freedom of establishment. The Swedish rules concerning qualified mergers in chapter 37 in the Swedish income tax act was questioned in the case RÅ 2009 ref 13. The criterion stated in § 11 was discussed first by the Swedish tax board and then by the Swedish Supreme Administrative Court as a possible breach of the freedom of establishment. It is in my opinion clear that when a loss is definitive the loss should be entitled to deduction, thus the 11 § could therefore constitute a breach of the freedom of establishment.</p>

<p>Den internationella rätten utgörs av mellanstatliga samarbeten mellan suveräna stater på olika områden. De suveräna staterna har exklusiv behörighet att lagstifta inom sina territorier och således har ingen annan stat rätt att stifta lagar som blir gällande på en annans stats territorium. Denna exklusiva rätt till självbestämmande benämns territorialitetsprincipen. På den internationella skatterättens område innebär territorialitetsprincipen att en stat har rätt att beskatta all inkomst som har ett samband med den staten. Detta görs genom att obegränsat skattskyldiga beskattas för all sin inkomst oavsett var den uppstått och begränsat skattskyldiga beskattas endast för den inkomst som uppkommit i den staten.</p><p>Då en självständig stat överlämnar en del av sin suveränitet till ett sådant internationellt samarbete som till exempel EG utgör, splittras det i internationell rätt vedertagna territorialitetsbegreppet eftersom den exklusiva lagstiftningskompetensen i viss mån måste delas med EG: s lagstiftande makt. Etableringsfriheten som stadgas i artiklarna 43 EG och 48 EG utgör en del av de åtaganden som medlemsstaterna måste beakta efter inträdet i EG. Medlemsstaterna får därigenom inte i sin nationella lagstiftning ha åtgärder som inskränker gemenskapsmedborgares och bolags rätt till fri etablering. Med tanke på att beaktandet av EG-rätten föranleder att territorialitetsbegreppet splittras kan det ifrågasättas om territorialitetsprincipen har någon ställning i EG-rätten. Härav är det även av intresse att utreda hu-ruvida territorialitetsprincipen kan utgöra en självständig rättfärdigandegrund av nationellt inskränkande åtgärder som anses strida mot etableringsfriheten.</p><p>Trots att det råder osäkerhet kring huruvida territorialitetsprincipen utgör en självständig rättfärdigandegrund eller inte åberopar medlemsstater principen på grund av att EG-domstolen erkänt principen i ett mål rörande etableringsfrihet. Därav kan territorialitetsprincipens ställning som rättfärdigandegrund inte enkelt avfärdas.</p><p>Vi anser dock inte att territorialitetsprincipen har en ställning som självständig rättfärdigandegrund av nationell lagstiftning som inskränker etableringsfriheten i artiklarna 43 EG och 48 EG. Territorialitetsprincipen fördelar enbart upp beskattningsbehörigheten mellan medlemsstaterna och har enligt oss samma definition inom EG-rätten som den har i den internationella skatterätten. På grund av att territorialitetsprincipen i internationell skatterätt endast används för att definiera en stats beskattningsbehörighet anser vi att principen inte går att använda som stöd för att neka en gemenskapsmedborgare eller ett bolag en skatteförmån enbart med hänvisning till principen.</p> / <p>International law is composed by cooperation between sovereign states within different areas. Sovereign states have the power to legislate within their territories and because of this no other state can make binding laws on another state’s territory. This sovereign right to legislate is known as the principle of territoriality. Within international tax law the principle of territoriality means that a state has the right to taxation within its territory on all income related to that state. This means that those liable to full taxation are taxed on all their income regardless of where the income is earned and those liable to limited taxation are only taxed on income earned in that particular state.</p><p>When a sovereign state gives up parts of its sovereignty to the European Community (EC), which is a part of the international cooperation among states, the concept of territoriality is fragmentized since the exclusive legislative power that a state holds must be shared with the legislative power of the EC. The freedom of establishment in articles 43 EC and 48 EC must be respected by the Member States since they through the admission of the EC granted that they would not apply laws that restricted the right for community citizens and companies to establish themselves in other member states than their own. With the limitation of the state’s sovereignty the term of territoriality becomes vaguer and it can be ques-tioned if the principle of territoriality has a position within EC law. It is also interesting to examine whether the principle can be seen as a justification for national law that is in conflict with the freedom of establishment or not.</p><p>Even though there is some uncertainty whether the principle of territoriality can be seen as a valid justification or not the member states are still trying to invoke it. Since the European Court of Justice recognized the principle of territoriality in a case concerning the right to freedom of establishment it can not easily be dismissed.</p><p>We do not, however, consider the principle of territoriality to be an independent justification for laws that are in conflict with the freedom of establishment in articles 43 EC and 48 EC. We believe that the principle only attributes the right to taxation between the Member States and that the principle is defined as in international tax law. Because the principle is given this definition it can only be used to define a states ability to taxation. We believe that the principle can not be relied upon to deny a Community citizen or a company a right to a tax relief.</p>

<p>Den första svenska CFC-lagstiftningen trädde i kraft den 1 januari 1990 och har sedan dess genomgått flera omarbetningar. Syftet med de svenska CFC-reglerna är att förhindra skatteplanering med bolag i lågbeskattade länder och på så sätt försvara den svenska skattebasen. I kort innebär de svenska CFC-reglerna en möjlighet att beskatta ägaren till ett i utlandet beläget CFC-bolag löpande för dess inkomster från CFC-bolaget.</p><p>EG-domstolens dom <em>Cadbury Schweppes</em> föranledde att flera av medlemsländerna, däribland Sverige tvingades ändra sina CFC-lagstiftningar. EG-domstolen konstaterade att CFC-lagstiftning utgör en inskränkning av etableringsfriheten och skall förbjudas såvida CFC-bolaget inte utgör ett rent konstlat upplägg och då etableringen sker i syfte att undvika nationell skatt. CFC-beskattning får inte vidtas om det kan visas att det föreligger en verklig etablering från vilken det bedrivs en faktisk ekonomisk verksamhet. Bedömningen om en sådan etablering föreligger, skall grundas på objektiva omständigheter som kan kontrolleras av utomstående, däribland i vilken grad CFC-bolaget existerar fysiskt i form av lokaler, personal och utrustning.</p><p>Den svenska regeringen valde att införliva utgången av målet genom en ny kompletteringsregel i 39a kap. 7a § IL. Regeringen valde att formulera lagstiftningen som att en inkomst hos en utländsk juridisk person som hör hemma i en stat inom Europeiska ekonomiska samarbetsområdet inte anses lågbeskattad om den utländska juridiska personen i den stat där den hör hemma utgör en verklig etablering från vilken en affärsmässigt motiverad verksamhet bedrivs. För att göra denna prövning listar regeringen tre omständigheter som särskilt skall beaktas. Den utländska juridiska personen skall för det första förfoga över egna resurser i form av i form av lokaler och utrustning i den utsträckning som är nödvändig för dess verksamhet. För det andra skall den förfoga över personal med den kompetens som är nödvändig för att självständigt bedriva verksamheten och slutligen skall den utländska juridiska personens personal självständigt fatta beslut i den löpande verksamheten. Formuleringen av lagstiftningen har fått mycket kritik i förarbetena och i doktrinen framförallt eftersom den svenska lagstiftningens formulering avviker från EG-domstolens formulering i domen.</p><p>Magisteruppsatsen syftar till att utreda och analysera den nya kompletteringsregelns i 39a kap. 7a § IL förenlighet med etableringsfriheten med särskilt beaktande av utgången i målet <em>Cadbury Schweppes</em>. Dessutom kommer eventuella tillämpnings- och tolkningsproblem att klargöras och analyseras. Slutsatsen är att den nya kompletteringsregeln löper stor risk att anses som oförenlig med etableringsfriheten samt att formuleringen skapar tolkningsproblem och väcker osäkerhet inför framtida tillämpning. Eftersom den nya kompletteringsregeln syftar till att förena den svenska CFC-lagstiftningen med EG-rätten borde det mest förnuftiga istället varit att den nya kompletteringsregeln endast innehöll grundelementen som kommer till uttryck i EG-rättens dom, medan detaljerna istället överlåts till rättsutvecklingen.</p> / <p>The first Swedish CFC legislation came into force on January 1^st 1990 and has since undergone several revisions. The purpose of the Swedish CFC rules is to prevent tax avoidance by companies located in low tax countries and thus defend the Swedish tax base. In short, the Swedish CFC legislation implies an opportunity to tax the owner of a foreign located CFC of its revenue from the CFC.</p><p>The ECJs ruling in the <em>Cadbury Schweppes</em> case caused several of the member states, including Sweden to change its CFC legislation. The ECJ ruled that the CFC legislation constitutes a restriction on the Freedom of Establishment and should be prohibited unless the CFC does not constitute a wholly artificial arrangement intended to escape the national tax normally payable. CFC-taxation may not be made if it is proved that there is an actual establishment intended to carry on a genuine economic activity. The finding if such an establishment exists must be based on objective factors which are ascertainable by third parties with regard, in particular, to the extent to which the CFC physically exists in terms of premises, staff and equipment.</p><p>The Swedish government chose to incorporate the outcome of the ruling by implementing a new CFC-legislation - 39a. 7a § IL. The government chose to formulate the legislation so an income of a foreign legal entity which belongs in a state within the European Economic Area is not considered to be low taxed if the foreign legal entity in the home State is an actual establishment from which a commercially motivated business is managed. To make this finding, the government lists three factors that require specific consideration. The foreign legal entity must according to the first factor have their own resources in the form of in the form of premises and equipment to the extent necessary for its activities. The second factor sates that the control of staff with the skills necessary to independently carry out the activity and finally shall the staff independently make decisions in the ongoing activities. The wording of the legislation has received much criticism in the preparatory work and in the literature especially since the wording of the Swedish legislation differs from the one made by the ECJ.</p><p>This Master's thesis aims to investigate and analyze the new Swedish CFC-legislation in 39a. kap. 7a § IL and to analyze if it is compatible with the Freedom of Establishment with specific regard to the outcome of the <em>Cadbury Schweppes </em>case. Moreover, any application or interpretation problems will be clarified and analyzed. The conclusion is that the new Swedish CFC legislation threatens to be incoherent with the freedom of establishment and that the wording creates problems of interpretation and raises uncertainty about the future application. As the new CFC legislation intends to reconcile the Swedish CFC legislation with EC law it should be more reasonable if the new rule only contained the basic elements as reflected in the ruling, while details instead were left to the legislative development.</p>