Recent ECJ case law addresses situations in which PE losses are recaptured at the head office level following a cross-border reorganization pursuant to which a PE is wound up or transferred to a different company. This article examines whether the recapture rule, under article 10(1) of the Merger Directive (2009/133), restricts the freedom of establishment and, if so, whether a justification applies. Does a recapture go beyond what is necessary to attain the objectives pursued?