AG Kokott would bury Marks & Spencer for French tax groups

Advocate General Juliane Kokott has proposed that the Court of Justice close the door on cross-border definitive-loss relief for French tax-integrated groupsEuropa. In her Opinion of 22 October 2026Europa in joint cases C-287/25 to C-289/25 OPmobility and Société GénéraleEuropa, given on references from the Conseil d’État, she concludes France need not let a resident parent deduct a non-resident subsidiary’s definitive lossesEuropa. OPmobility seeks to absorb 18,435,612 euros of losses of its liquidated Belgian subsidiary in its 2015 consolidated result; Société Générale seeks to absorb 9,049,114 euros of losses of its liquidated Slovak subsidiary and 35,262,226 euros of losses of its liquidated Latvian subsidiary in its 2013 and 2014 results. French law lets a 95%-held tax group consolidate profits and lossesEuropa, but only companies subject to French corporation tax may joinEuropa.

On the first question, comparability turns on the exercise of taxing power, not on the wish to join a tax groupEuropa. France taxes resident companies on worldwide profitsEuropa and non-residents only on French-source business profitsEuropa, and the double-taxation treaties with Belgium, Latvia and Slovakia confirm that it does not tax the subsidiaries’ profitsEuropa. A resident parent seeking relief for resident-subsidiary losses and one seeking relief for non-resident-subsidiary losses are therefore not objectively comparableEuropa: where the residence state taxes neither the profits, it owes no loss relief eitherEuropa. That follows the Court W ruling on non-resident permanent establishmentsEuropa, and applies a fortiori to subsidiaries, which unlike dependent establishments are independent legal persons taxable only where seated. The Bevola comparability finding has in effect been abandoned by WEuropa, and whether non-taxation stems from domestic law or a tax treaty is irrelevant for subsidiaries, since a treaty override remains possible and the result is identical.

On the second question, asked only in the alternative, the refusal is in any event justifiedEuropa. A rule such as that in Articles 223A and following of the French CGI, under which the definitive losses of a non-resident subsidiary of a group company cannot be set against the overall result of that group under a tax-integration regime, would nevertheless be compatible with freedom of establishmentEuropa, and in any case the twin aims of preserving the allocation of taxing powers and fiscal coherence are legitimateEuropa: the advantage actually conferred by the tax integration of domestic companies, namely taking a subsidiary’s losses into account in computing the taxable base, is directly offset by the symmetric disadvantage of taxing those companies’ profits at group levelEuropa, as shown by the fact that a subsidiary’s losses can only be taken into account from the date of tax integration. It is also proportionateEuropa. Isolated cross-border loss relief is a loss import at the sole cost of the parent residence stateEuropa, which would bear the consequences of the subsidiary state tax and policy choices without ever taxing that subsidiary’s future profits, with worldwide loss-import risk via free movement of capital. The Marks & Spencer exception, meant as a case-specific safety valve, now ultimately creates more legal uncertainty than legal clarityEuropa: to this day it is still not exactly known what definitive losses are or which situations that judgment covers, and it is unsure whether taking into account losses accumulated over several years can be based on it, so cross-border loss relief is no longer the least restrictive meansEuropa. Bevola is distinct: dependent establishments plus Danish international joint taxation, neither present hereEuropa.

The legal basis is Articles 49 and 54 TFEU, Articles 209, 223A, 223I, 220 quinquies and 214 of the French code général des impôts, and the French double-taxation treaties with Belgium, Latvia and Slovakia.