Finanzamt Linz v Bundesfinanzgericht, Aussenstelle Linz

In Finanzamt Linz v Bundesfinanzgericht Aussenstelle Linz (C-66/14) (16 April 2015) the advocate general (AG) considered that the rules on the amortisation of goodwill which differentiate between participation in resident and non-resident companies are not compatible with EU law.

The issue was whether the Austrian provisions on the taxation of groups are compatible with EU law as acquisitions in Austrian companies are treated differently from those in non-resident companies. Goodwill amortisation is only available within Austrian companies.

The AG considered that this difference was potentially in breach of the principle of freedom of establishment. It robustly rejected the Austrian government’s argument that this would not be an issue in situations where the goodwill is negative noting that acquisitions of companies with negative goodwill are likely to be very rare. The AG also noted that for these purposes resident and non-resident subsidiaries are...