In a recent judgement, the CJEU ruled that the Swedish interest deduction rules are incompatible with the freedom of establishment. Under the disputed rule inter-company cross-border interest deduction was denied unless the borrower could prove that the main reason for the debt was not that the group wanted to obtain a substantial tax benefit. Due to the similarities of the Swedish rules with Sec 12 para 1 no 10 CITA, the CJEU is of particular relevance for assessing whether Sec 12 para 1 no 10 CITA is compatible with EU law. Richard Jerabek and Nikolaus Neubauer summarize the judgement and analyze its impact on Sec 12 para 1 no 10 CITA.
