Pirelli Cable Holding NV & Ors v Inland Revenue

Pirelli Cable Holding NV & Ors v Inland Revenue

The entitlement to a tax credit under the relevant DTAs is not displaced by the existence of a group income election under s.247 ICTA; the DTA provisions are exhaustive and override domestic limitations. The Article 10 DTA payments to the parent companies do not constitute countervailing advantages reducing or...

Source-derived case information.

Parties
Respondent: Pirelli Cable Holding NV and Others; Appellants: The Commissioners of Inland Revenue
Jurisdiction
England and Wales
Judgment Date
17 December 2003
Procedural Posture
Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Double Taxation Agreements, Corporation Tax, Advance Corporation Tax (act), Group Income Election, Freedom of Establishment (article 43 Ec), Restitution for Unlawful Taxation, Parent Subsidiary Directive, Withholding Tax
Tax Law European Union Law Double Taxation Agreements Corporation Tax Advance Corporation Tax (act) Group Income Election Freedom of Establishment (article 43 Ec) Restitution for Unlawful Taxation +2 more

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Summary, issues, holding and outcome

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Parties

Pirelli Cable Holding NV and Others

Respondent

The Commissioners of Inland Revenue

Appellants

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether non-UK resident parent companies would have been entitled to a tax credit under s.231 ICTA via DTA if dividends were paid under a group income election (the election issue)
  2. 2 Whether the Article 10 DTA payments to the parent companies constitute countervailing advantages reducing or extinguishing the subsidiaries' claims (the assessment issue)
  3. 3 Whether ACT constitutes a withholding tax under Article 5 of the Parent-Subsidiary Directive (the withholding tax issue)

Ratio Decidendi

The entitlement to a tax credit under the relevant DTAs is not displaced by the existence of a group income election under s.247 ICTA; the DTA provisions are exhaustive and override domestic limitations. The Article 10 DTA payments to the parent companies do not constitute countervailing advantages reducing or extinguishing the subsidiaries' claims, as the harm and benefit accrue to different legal persons. The matter of whether ACT constitutes a withholding tax under the Directive is not acte clair and should be referred to the CJEC if material.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed
  • Costs reserved generally pending determination of the costs hearing before Park J.