On 15 May 2008, the European Court of Justice (ECJ) gave its decision in the case of Lidl Belgium GmbH & Co. KG v. Finanzamt Heilbronn (C-414/06). The Federal Finance Court (Bundesfinanzhof) had requested a preliminary from the ECJ on 28 July 2006.

The ECJ held that Art. 43 of the EC Treaty (freedom of establishment) does not preclude a situation in which a company established in a Member State cannot deduct from its tax base losses relating to a permanent establishment belonging to it and situated in another Member State, to the extent that, by virtue of a tax treaty, the income of that establishment is taxed in that other Member State where those losses can be taken into account in the taxation of the income of that PE in future accounting periods.