Negative Harmonization in Tax Matters: EU Case Law on Cross-Border Transfers of Losses

The decisions of the Court of Justice of the European Union do not always result in the best outcome for either taxpayers or policymakers. Notably, with reference to the cases on cross-border transfer of losses, the absence of common direct tax measures have resulted in “negative harmonization” and in a breach of cross-border neutrality. As a result, the decisions of the Court have threatened the equal distribution of taxing powers amongst the Member States.