Source: All England Reporter
Publisher Citation: [2008] All ER (D) 361 (Jun)
Court: Court of Justice of the European Communities (Fourth Chamber)

Judges Lenaerts (President of the Chamber), Arestis (Rapporteur), Silva de Lapuerta, Juhasz and von Danwitz

Judgment Dates: 26 June 2008


European Community - Freedom of establishment - Taxation - Common system of taxation applicable in case of parent companies and subsidiaries of different member states - Company with a share capital - Distribution of revenue and of increases in share capital - Withholding tax - Tax credit - Treatment of resident shareholders and non-resident shareholders - EC Treaty, art 52 - Council Directive (EEC) 90/435, art 5.

The Case

European Community Freedom of establishment. A provision of national law which, in relation to cases where profits were distributed by a subsidiary to its parent company, provided for the taxation of income and asset increases of the subsidiary which would not have been taxed if they had remained with the subsidiary and had not been distributed to the parent company did not constitute withholding tax within the meaning of art5(1) of Council Directive (EEC) 90-435 (on the common system of taxation applicable in the case of parent companies and subsidiaries of different member states. Article 52 (amended to art43) EC had to be interpreted as not precluding the application of a national measure, such as that at issue in the instant case, under which the taxation of profits distributed by a subsidiary resident in a member state to its parent company was subject to the same corrective mechanism regardless of whether the parent company was resident in the same member state or in another member state even though, unlike a resident parent company, a non-resident parent company was not granted a tax credit by the member state in which the subsidiary was resident.

Practice Areas

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