The European Court of Justice (ECJ) ruled in the National Grid Indus case that a company migrating to another EU Member State must be given the choice of either making an immediate payment of exit tax or obtaining the deferment of the payment of tax if the company is willing to bear the administrative burden of tracing the assets that have been relocated abroad. However, two statements of the Court relating to a Member's State's ability to charge interest and to require a bank guarantee have caused some confusion. As demonstrated in this article, charging interest on deferred exit taxes is not proportionate and violates the freedom of establishment principle. Member States can require a security only where there is a palpable risk that the deferred tax is non-recoverable.
Intertax