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In its CLT-UFA decision from February 23, the ECJ held that the freedom-of-establishment principle precludes charging the profits of branches and subsidiaries from other EU countries to differing rates under the old system of corporation tax.

In the Marks & Spencer case (C-446/03) the ECJ held that if an EU member state allows a parent company to deduct losses of domestic subsidiaries then a rule which generally prevents the deduction of losses incurred by a foreign (non-resident) subsidiary is a restriction of the freedom of establishment and an infringement on articles 43 and 48 of the EC Treaty. Such restriction might be justified if the non-resident subsidiary (or a third party) has the possibility to claim relief with regard to the losses in the other country. They can do this, for example, by applying the loss against profits of prior periods by way of a loss carry-back, by carrying the loss forward to offset against future income or by transferring the loss to a third party.

Directive 69/335 – Indirect taxes on the raising of capital – National legislation providing for the charging, in the case of a ‘reverse’ merger, of a proportional registration tax of 1% of the value of such a transaction – Classification as capital duty – Increase in capital – Increase in the assets of the company – Increase in the value of shares – Provision of services by a member – Decision to merge made by the members of the member.

VAT – Deduction of input tax – Capital goods – Immovable property – Adjustment of deductions.

Freedom of establishment – Freedom to provide services – Competition rules applicable to undertakings – State aid – Tax Advice Centres – Pursuit of certain tax advice and assistance activities – Exclusive right – Remuneration for such activities.

Laszlo Kovacs, the European commissioner responsible for taxation and customs union, highlighted four priority areas – reducing economic restructuring costs, eliminating double taxation for cross-border activities, tax system simplification and removing tax obstacles – in a speech given at the Centre for Business Taxation in Oxford.

Heather Gething stepped down as Herbert Smith's head of tax after four and a half years. She moves to the new role of head of tax planning and disputes. Neil Warriner, her deputy, who is real estate specialist, moves up to become head of the department. Bradley Philips will be his deputy.

HMRC will invest about £340million in online services over nine-years in a bid to get all businesses to file tax returns online by 2012. HMRC believes that this will save businesses £175million a year. To view the HMRC press release, click here.

The Treasury Department and IRS have issued Notice 2006-36, inviting public comment on recommendations for items that should be included on the 2006-2007 Guidance Priority List. The 2006-2007 list will feature guidance that the authorities intend to publish between July 1 and June 30 2007. The announcement follows the release of the updated Priority Guidance Plan on March 6.

A hearing into the impact of international tax reform on US competitiveness will be held by the Subcommittee on Select Revenue Measures of the US House of Representatives' Ways and Means Committee on May 23 in Washington