The European Union Court of Justice decides that the withholding tax that applies in Germany over dividend distributions to non resident entities is not in line with the free movement of capital

2 November 2011

The decision is taken the 20th of October of 2011 in the Case C-284/09 “European Commission against the Federal Republic of Germany”.

The ECJ decides that, by taxing dividends distributed to companies established in other Member States, where the threshold for a parent company’s holding in the capital of its subsidiary laid down in Article 3(1)(a) of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, as amended by Council Directive 2003/123/EC of 22 December 2003, is not reached, more heavily in economic terms than dividends distributed to companies established in its territory, the Federal Republic of Germany has failed to fulfil its obligations under Article 56(1) EC.

For further information, please contact José Blasi: [email protected]