April 23
2021
Anjum Shabbir
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25th February 2021
External Relations & Trade Internal Market Tax

Double taxation of foreign source dividends: Court of Justice rules no free movement of capital restriction in comparison with domestic-source dividends due to limited tax credit provided

The Court of Justice has ruled in Société Générale SA v Ministre de l’Action et des Comptes publics (C-403/19) that the free movement of capital rule under Article 63 TFEU is not precluded by national withholding tax rules on foreign-source dividends (which aim to offset double taxation of dividends) in the specific case at hand, where a specific and limited offsetting tax credit has been granted (the amount the first Member State would receive if those dividends alone were subject to corporation tax, and not offsetting in full the levy paid in other Member States).

In coming to its conclusion, the Court pointed out:

the preliminary remark that EU law does not prescribe general criteria for the allocation of powers between Me
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