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France Referred To ECJ For 'Discriminatory' Dividends Tax

by Ulrika Lomas, Tax-News.com, Brussels

13 December 2016


The European Commission has referred France to the European Court of Justice for failing to comply with a previous judgment on the taxation of dividends.

The dispute concerns the refund of tax paid in France by companies with subsidiaries in other EU member states, under the "advance payment of tax" mechanism. The Commission said that it takes the view that France is not complying with a 2011 Court of Justice ruling on three specific points.

It said that the French regime does not take into account the tax already paid by non-French subsidiaries, and limits the system of tax credits to one third of the dividend redistributed by a non-French subsidiary. According to the Commission, this limit constitutes a difference in the treatment between companies receiving dividends originating in other member states and those receiving dividends of French origin.

Finally, the Commission said that in order to restrict the right of the companies to a refund, France maintains requirements concerning the evidence to be provided. By doing so, France does not comply with the criteria laid down by the Court in its previous judgment, the Commission argued.

The Commission sent France a letter of formal notice on November 27, 2014, followed by a reasoned opinion on April 29, 2016. It said that as France has not yet complied, it is now bringing the matter before the Court.

TAGS: tax | European Commission | tax credits | transfer pricing | France | dividends | European Union (EU) | Europe

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