X and Y v Riksskatteverket: ECJ 21 Nov 2002

Europa Freedom of establishment – Free movement of capital – Income tax – Tax advantages for the transfer at undervalue of shares to companies in which the transferor has a holding
Swedish legislation provided that a transfer at an undervalue to a foreign company in which the transferor had an interest would be treated as a transfer at market value, and the same would apply in the case of a transfer to a Swedish company in which such foreign person had a holding.
Held: Articles 43 and 48 EC precluded such a provision because it restricted the right of establishment of the foreign company in Sweden. It excluded the transferor at undervalue of shares from the benefit of deferral of tax due on capital gains made on those shares where the transfer was to a foreign legal person in which the transferor directly or indirectly had a holding, provided that that holding gave him definite influence over the company’s decisions and allowed him to determine its activities, or to a Swedish limited company which was a branch of such a foreign legal person.


C-436/00, [2002] EUECJ C-436/00, [2004] STC 1271





Cited by:

CitedFoulser and Another v HM Inspector of Taxes ChD 20-Dec-2005
The taxpayer company entered into an arrangement in which shares were purchased by a company based in Ireland and resold. A claim was made for holdover relief.
Held: The scheme failed. The restriction imposed did not infringe the right of . .
Lists of cited by and citing cases may be incomplete.

European, Income Tax

Updated: 16 May 2022; Ref: scu.178310