The court had been asked to provide a practical interpretation of the ruling on group tax relief rules from the European Court of Justice (ECJ) in 2005.
The Court of Appeal ruled that where a company was offsetting losses made by an overseas subsidiary against profits made in the UK for tax purposes, it had to show there was 'no real possibility' of those losses being used locally, at the time it made the claim for group tax relief.
This wider interpretation of the ECJ's ruling could save companies hundreds of millions of pounds, according to court papers.
KPMG tax specialist Jonathan Bridges said the decision was good news for M&S, which led the appeal campaign, and other taxpayers who had made similar claims for loss relief.
However, it will still be up to a specialist tax tribunal to consider the facts in individual cases.