Inspecteur van de Belastingdienst v SCA Group Holding, MSA International Holdings and MSA Nederland

In the joined cases Inspecteur van de Belastingdienst v SCA Group Holding MSA International Holdings and MSA Nederland (C-41/13 – 12 June 2014) the CJEU held that legislation precluding tax consolidation where intermediary companies were non-resident was in breach of the European Treaty.

SCA and MSA are both incorporated in the Netherlands. They own directly and indirectly German subsidiaries which own Dutch ‘sub-subsidiaries’.

SCA and MSA and their respective Dutch sub-subsidiaries applied to be treated as two single tax entities under Dutch tax law – so that their profits could be consolidated at group level. This was denied on the basis that the intermediary companies were incorporated in Germany.

The court observed that Dutch law treated groups differently depending on whether the parent company held its subsidiaries via Dutch intermediary companies or non-Dutch intermediary companies. This difference of treatment was prima facie in breach of the...