The legal provisions that provide that only the losses suffered by a company member of a tax-consolidated group can be set off against the overall result are incompatible with the freedom of establishment, in the event where they have the effect of depriving a French group of any effective possibility of deducting from its consolidated result the permanent losses of a subsidiary of the group based on European Union territory which fulfils the other tax consolidation requirements, when this deduction would have been possible for a French subsidiary.
The refusal by the administration to allow the deficits of a foreign subsidiary in one country of the European Union to be set off by its parent company based in another country member of the EU disregards the stipulations of the Treaty on the Functioning of the EU, when the deficits of the permanently liquidated subsidiary are no longer deductible in its country and it could have belonged to the consolidated group if it had been based in the country of the parent company.
