![]() ![]() If the original claim is denied, investors may pursue litigation. The process for this, as might be expected, varies by market and entity type. Because member state tax authorities often amend procedures after initial rulings, investors alleging discriminatory tax treatment should file ‘protective claims’ prior to anticipated legislative changes in an attempt to preserve possible entitlements. To file a discrimination-based claim, investors must first identify an ECJ ruling that can be used as precedent. How does an investor file a discrimination-based claim? Dyrektor Izby Skarbowej w Bydgoszczy: held that the dividends paid to investment funds in non-member states must receive similar exemptions to investment funds established in member states. Emerging Markets Series of DFA Investment Trust Company v.Directeur des résidents à l’étranger et des services généraux: consolidated a series of cases against French governmental agencies, concluding that member states are prohibited from applying different tax treatment to entities from other states versus entities in their own country. ![]() S antander Asset Management SGIIC SA v.The Norwegian State: established that non-resident shareholders must receive similar dividend tax credits as those granted to resident shareholders. Several of the most influential cases include: The European Court of Justice has heard a number of cases alleging discriminatory treatment, and consistently ruled to outlaw the practice. What cases have established the legal precedent for EU discrimination claims? Failing to maintain that neutrality is discriminatory. However, in keeping with the objective of a common market, member state tax authorities must apply the same tax treatment to entities regardless of their residency. ![]() While the free movement of capital principle forbids member states from restricting the purchase of currency or shares of foreign companies, each state retains the right to tax income ( e.g., dividends, interest, and capital gains). ![]() Together, the Treaty on the Functioning of the European Union and the Treaty on European Union establish the constitutional basis for the European Union and the free movement of goods, capital, services, and people across the common market. To remedy any misconceptions, we attempt to answer some of the most frequently asked questions about reclaiming taxes under the precedent of these court decisions. As a result of those rulings, comparable beneficial owners from inside and outside of the European Union have begun filing discrimination-based claims with the tax authorities of EU member states to recover improperly withheld taxes.Īlthough discrimination-based claims can materially enhance portfolio returns, the case landscape is rapidly evolving and is thus less than straightforward. A number of these “tax discrimination” cases have made their way to the European Court of Justice (“ECJ”), which has established a body of precedent prohibiting such differential tax treatment. While the European Union’s (“EU”) common market provides for the free movement of goods, capital, services, and people across member states, harmonizing the laws of the 28 participating jurisdictions has proven challenging – especially in the world of cross-border tax.ĭue to varying national laws, member states have applied different tax treatment to resident versus non-resident entities. ![]()
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