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France: Implications of pending CJEU case on Belgian “fairness tax”

France: Implications of Belgian "fairness tax"

The Advocate General of the Court of Justice of the European Union (CJEU) on 14 November 2016 issued an opinion in a case concerning the compatibility of the Belgian “fairness tax” with EU law and regulations and specifically with respect to the EU Parent/Subsidiary Directive. For taxpayers in France, the case raises a question—Do the CJEU Advocate General’s findings have implications for the 3% tax imposed on certain dividend distributions in France?


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The Belgian “fairness tax” is a tax due on distributions made by Belgian companies out of profits which, in certain instances, have not been fully subject to the “regular” corporate income tax in Belgium. The French 3% tax on dividend distributions generally is due (except in certain circumstances) by French companies on distributions of dividends that they make—whether or not the profits out of which the dividend distribution are made were subject to tax in France (and thus whether fully taxable or not).

The CJEU Advocate General concluded that while the Belgian “fairness tax” does not infringe article 5 of the EU Parent-Subsidiary Directive—since it is a levy not assessed on the dividend recipient, but on the distributing company (this also applies for the French 3% tax on distributions)—the Advocate General found that the Belgian tax is in breach of article 4 of the Parent-Subsidiary Directive because it imposes an additional tax in situations of redistribution by a Belgian company of dividends received from its European subsidiaries. Read TaxNewsFlash-Europe

KPMG observation

To understand fully the implications of this case, taxpayers will have to wait for the judgment to be issued by the CJEU. Until that time, what could taxpayers do to anticipate a decision by the CJEU judges if they reach same conclusion as the Advocate General? And what could the implications of that judgment be with respect to the French 3% tax on distributions? The French Supreme Tax Court (Conseil d’Etat) has already referred a question to the CJEU as to whether the French 3% tax is compatible with the Parent/Subsidiary Directive, and specifically article 4. 

Assuming that the CJEU judgment in the Belgian fairness tax case agrees with the opinion of the Advocate General, it would appear the reply to the French court’s referral would be, in all likelihood, the same. If so, this would imply that French companies have been unduly subject to the 3% tax on the redistribution (outside of a French tax group) of the dividends they received from their European subsidiaries. And this would mean that for the 3% tax paid on such redistributions in 2014 and later, taxpayers would want to consider filing a refund claim as soon as possible—and at the very latest by 31 December 2016.

What steps would be next? Prudent taxpayers will want now to track their dividend flows in order to be able to demonstrate and document that the dividends received from their EU/EEA subsidiaries have been redistributed and that such redistributions triggered application of the French 3% tax on dividend distributions.


For more information, contact a tax professional with Fidal* in France or with KPMG in the United States:

Gilles Galinier-Warrain | +33 1 55 68 16 54 | 

Olivier Ferrari | +33 1 55 68 18 14 |

Laurent Leclercq | +33 1 55 68 16 42 |

Patrick Seroin | +1 (212) 954-2523 |   


* Fidal is a French law firm that is independent from KPMG and its member firms.

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