The Court of Justice of the European Union (CJEU) on 21 December 2016, published a judgment in the case of:Masco Denmark and Damixa about the Danish corporate tax rules that provide an exemption from tax for interest income on loans provided by a Danish resident company to its Danish affiliated companies, if the corresponding interest expenditure deduction is denied the debtor because of application of the thin capitalization rules. Such an exemption from tax is denied when the affiliated debtor company is a resident in another EU Member State.

Contrary to the Opinion issued by Advocate General (AG), the Court concluded that this difference in treatment constitutes a restriction on the EU freedom of establishment. Furthermore, the difference in treatment was found not to be justified under either the balanced allocation of taxing rights or tax evasion.