Royal Philips Electronics NV should win a European Union court challenge against the British government that may allow it deduct U.K. losses from tax paid by a subsidiary, an EU court aide said.
Juliane Kokott, a legal adviser to the EU’s Court of Justice, said Britain may have violated EU rules when it refused to allow Philips to count losses of around 64 million pounds ($103 million) from the U.K. subsidiary of LG Philips Displays Netherlands BV against corporation tax paid by its unit Philips Electronics UK Ltd. from 2001 to 2004.
While the advocate general’s opinion isn’t binding, it is followed by the EU’s highest court in most cases.
The U.K. was forced to amend laws on company group relief after a December 2005 ruling from the Court of Justice that said Marks & Spencer Group Plc and others should be able to deduct foreign losses from their tax bills in limited circumstances.
Joost Akkermans, a spokesman for Philips in Amsterdam, and Jan Marszewski, a spokesman for the U.K. tax authority, both declined to comment because there hasn’t been a final ruling.
The case is C-18/11 The Commissioners for Her Majesty’s Revenue & Customs v Philips Electronics UK Ltd.