Marks & Spencer has won a £30 million tax battle with the Treasury in a European court ruling that may trigger a wave of similar claims against governments across the continent potentially worth billions more.

But European tax experts were this morning characterising the judgment as a "score draw", because it would be allowed only where all possibilities for the losses to be claimed against profits in the subsidiary’s own country had been exhausted.

Pat Dugdale, tax partner at SJ Berwin LLP, said: "It does look as if the judgment is not as far-reaching as it could have been. Everyone was expecting M&S to win but the court could have made a harsher rule. I would say that it is pretty much a compromise."

Today's ruling by the European Court of Justice gives M&S the right to set its losses at its continental subsidiaries in France, Belgium and Germany against its domestic tax bill.

M&S pulled out of continental Europe in 2001 after running up substantial losses. Its withdrawal from France sparked domestic protests.

Today, the European court upheld M&S's claim that British tax law flouted European Union regulations. As a consequence, the retailer receives a £30 million tax windfall from the Treasury.

Although the court ruled that, in principle, the Treasury has the right to ban companies from claiming tax against loss-making international subsidiaries, it said it was "contrary to freedom of establishment" to preclude a claim if it was not possible under the tax regime of the other country.

The court said the British tax regime went "beyond what is necessary to attain the objectives pursued".

M&S said it was pleased the court had reached a conclusion but declined to comment further until it has had time to digest the full implications of the ruling.

Central to the court's findings was the idea that tax law should not act as a disincentive to companies hoping to expand internationally.

But the court made it clear that if a company can recoup tax losses in the specific country where it operates, then it should not be allowed to go to its home market with a claim.

Ms Dugdale said companies that have shut down their operations in continental Europe may find they have an immediate case to present to the Treasury. However, companies that are still trading internationally will find it harder to benefit from today's judgment.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax