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Newsletter - Tax | EFTA Court – Norwegian group contribution rules subject to “final loss” exception

The EFTA Court holds in a recently published Advisory Opinion that the Norwegian rules on intra-group contributions must be subject to a ”final loss” exception.

A Norwegian group is, subject to certain conditions, allowed to offset the taxable income of one group company against a tax loss of another group company. The group achieves this by transferring the taxable income as an intra-group contribution. One of the conditions is that both the transferor and the transferee must be taxable to Norway. Consequently, a Norwegian company may not transfer its taxable income to a foreign group company that is not taxable to Norway.

It has been argued that a transferor being taxable in Norway, in certain situations, must be allowed to make group contributions not only to group companies that are taxable to Norway, but also to subsidiaries that are resident in other member states of the European Economic Area (EEA) (irrespective of whether the subsidiary is taxable to Norway). More specifically, it has been argued that a group contribution must be allowed where the EEA resident subsidiary is in a so-called “final loss” position. This argument is based on the ”final loss” exception that has been recognized by the European Court of Justice in certain cases involving EU member states (such as C-446/03 and C-172/13)

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