The Court of Justice of the European Union (CJEU) has issued a key ruling questioning the compatibility between Dutch legislation and the free movement of capital guaranteed by the Article 63 of the TFEU.
What is the case about?
- In the Netherlands, dividends from entities non-residents are taxed at 15%, with no possibility of recovering this withholding.
- On the other hand, entities residents you can deduct this tax on your Corporate Tax return, which eliminates the effective tax burden.
This difference generated a complaint from a British insurer, whose Dutch dividends were subject to this definitive tax.
Conclusions of the CJEU:
- Resident and non-resident entities are in a situation comparable, and this unequal treatment discourages foreign investment.
- Unjustified restriction: The regulations are not supported for reasons such as the coherence of the tax system or the prevention of double counting of burdens.
- The impact is undue, since non-resident entities have no way of eliminating the effective tax burden.
Final decision: Dutch legislation is incompatible with the free movement of capital and discriminates against non-resident entities.
Global impact: This ruling reinforces the need to ensure equitable treatment in cross-border taxation within the EU.
