The CJEU has ruled that Air Berlin can reclaim overpaid stamp duty reserve tax on share transfers made in 2006 and 2009.
In 2006, Air Berlin made an initial public offering on the Frankfurt Stock Exchange. In order to do so, it had to transfer the legal title to its shares to a nominee for the stock exchange’s settlement and clearing service. Such a transfer was taxable under UK law (FA 1986 s 70). In 2009, the process was repeated when Air Berlin wished to list an additional tranche of newly-issued shares. In total £5.25 million of SDRT was paid on the two sets of transfers. As is typical in situations like this, the company bore this cost. Air Berlin brought proceedings after HMRC refused to repay the tax. The company argued that the tax was contrary to provisions of EU law that prohibit the taxation of transactions for the raising of capital.
The Court of Justice of the European Union (CJEU), on a request for a preliminary ruling by the High Court, ruled in favour of Air Berlin. It held that the 2006 transfer, which was of the legal title only, was integral to the transaction admitting the shares to listing on the stock exchange. That transaction could not be subject to any form of taxation. The 2009 transfer, which was of new shares, was an integral part of an overall transaction involving the raising of capital. As such, it could not be subject to any form of taxation.
For further information please contact: