Victory against tax authorities regarding transfer of losses

Our taxation team has represented a group of companies of the energy sector in the dispute with the tax authorities over the transfer of losses between members of the same group and the reduction of the CIT burden. The case dealt with the application of the substance over form principle and interpretation of the true intentions of the legislative bodies upon creation of tax exemptions.

It was one of the first tax cases in Lithuania’s history dealing with the transfer of losses between companies of the same group since the relevant tax exemption was introduced fairly recently. Even more, in this case, the tax authorities deviated from their own published commentaries regarding conditions of transfer of losses and tried to create legal precedents, which a favorable to them, early on.

Since there was no case-law on this issue, our tax litigation team successfully represented the client before the Supreme Administrative Court by using foreign case-law and legal doctrine. This legal precedent has tremendous significance not only for our client but also for all taxpayers in Lithuania, which are members of the group of companies.