The Court of Justice of the European Union (CJEU) today issued a judgment in combined cases, holding that Dutch withholding tax on non-resident portfolio individual and corporate shareholders would be contrary to EU law if the tax burden on the non-resident is greater than it would be for a resident shareholder. In this respect, the comparison would need to take into account the corporate / individual income tax position of residents, and whether they could claim a credit or obtain a refund of the withholding tax.
The CJEU explained that in comparing this tax burden, only costs that are directly related to the collection of the dividends would be taken into account. A provision in a tax treaty could neutralize the breach of EU law if it results in a credit of the full amount of the withholding tax.
Read a September 2015 report prepared by KPMG’s EU Tax Centre: CJEU decision in the joined cases Miljoen, X, and Société Générale
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