Lexel AB v Sweden (Skatteverket) – Case C‑484/19

In Lexel AB v Skatteverket (Case C‑484/19), the Court of Justice of the European Union (CJEU) ruled that Swedish tax legislation, which denied Lexel AB the right to deduct interest payments made to a group company located in another EU Member State (France), infringed upon the freedom of establishment protected under Article 49 TFEU.

Lexel AB, a Swedish subsidiary of Schneider Electric Group, sought to deduct interest on a loan obtained from Bossière Finances SNC, another group company in France. The Swedish Tax Agency (Skatteverket) refused the deduction on the grounds that the loan’s primary purpose was to achieve a tax benefit. Lexel AB argued that this restriction was discriminatory because the same transaction between two Swedish companies would not have faced similar scrutiny.

The CJEU found that the Swedish rules unjustifiably restricted Lexel AB’s right to freedom of establishment by treating cross-border financial transactions less favorably than purely domestic ones. This judgment reaffirms the principle that national tax laws must not discriminate against cross-border intra-group transactions unless such measures are necessary to combat tax evasion or preserve a balanced allocation of taxation powers between EU Member States.