Case Law Trend: Foreign Permanent Establishment Losses Under the Fundamental Freedoms: Does W AG Bring an End to a Rollercoaster Ride?

Abstract

The article discusses the W AG case and the Court of Justice’s (the Court) previous cases on the cross-border deduction of foreign permanent establishment (PE) losses. The inconsistency of the case law is highlighted by demonstrating first the conflicts that remain in the case law regarding the status of final PE losses in the enterprise’s residence state, second, by the arbitrary use of comparability criteria by the Court when comparing the situation of domestic and foreign PEs. The article examines the consequences of the W AG decision with regard to the remaining questions on foreign PE losses, the potential impact on foreign subsidiary losses, and the damaging effect of the inconsistency of the Court’s methodology on the quality of its case law. EU fundamental freedoms, CJEU case law, foreign losses, permanent establishment losses, final losses, exemption method, unilateral exemption, exemption under tax treaty