The future of dividend taxes across Europe is uncertain. Several EU Member States have already been summoned by either the ECJ and/or the European Commission to end discriminatory treatment of cross border investments. The list of cases is growing every day.
For instance, the Netherlands have been forced to extend the exemption for > 5% shareholdings, which used to apply only to domestic shareholders, to residents of other EU countries. The same applies to the refund procedure for tax withheld on dividends paid to pension funds, charities and other tax exempt entities.
The Loyens & Loeff EU tax law group has been arguing for some time that investment funds across Europe should be entitled to refunds of dividend withholding taxes suffered by them, much in the same way as pension funds and charities. A major issue in these discussions has always been the question whether investment fund regimes in various EU member states are mutually comparable. Under EC law, only foreign taxpayers which are comparable to domestic entities are entitled to equal treatment. On 18 June 2009, the ECJ took a further step towards the abolishment of discriminatory taxation of cross border dividends received by European investment funds in the Aberdeen Case. The ECJ decided that the Luxembourg SICAV is fully comparable with a Finnish resident entity, and thus fully entitled to a refund of the Finnish dividend tax withheld based on EC Law.
Although the Aberdeen Case can not be said to put an end to all comparability discussions within Europe, the case is a huge encouragement for investment funds to file claims for refund of withholding taxes levied across the EU.
If you would like to learn more about the opportunity of increasing your return on investment by retrieving "lost money", please contact us.
Amsterdam :
Thies.Sanders@loyensloeff.com
+ 31 20 5785558
Frankfurt :
Alexander.Fortuin@loyensloeff.com
+ 49 69 97157605
Luxembourg :
Gilles.Dusemon@loyensloeff.com
+ 352 46 6230230
Simon.Paul@loyensloeff.com
+ 352 46 6230221