Brussels Securities (Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States - Judgment) [2019] EUECJ C-389/18 (19 December 2019)

Brussels Securities (Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States - Judgment) [2019] EUECJ C-389/18 (19 December 2019)

Article 4(1) of Directive 90/435 precludes national legislation that requires dividends received by a parent company from its subsidiary to be included in the tax base before a 95% deduction, with any surplus carried forward indefinitely, and that deduction having priority over another tax deduction (such as DRC) that may only be carried forward for a limited time, as this may result in the loss of a tax advantage and indirect taxation of the dividends, contrary to the directive's objective of tax neutrality.

Citation
[2019] EUECJ C-389/18
Parties
Applicant: Brussels Securities NV; Respondent: Belgian State
Jurisdiction
European Union
Judgment Date
19 December 2019
Procedural Posture
Preliminary Ruling (reference for Interpretation) / Judgment of the Court of Justice of the European Union
Outcome
Preliminary ruling: Article 4(1) of Directive 90/435 precludes such national legislation.
Legal Topics
Parent Subsidiary Directive, Corporate Taxation, Dividend Exemption, Order of Tax Deductions, Double Taxation Avoidance
European Union Law Tax Law Parent Subsidiary Directive Corporate Taxation Dividend Exemption Order of Tax Deductions Double Taxation Avoidance

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 13 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

Brussels Securities NV

Applicant

Belgian State

Respondent

Procedural Posture

Preliminary Ruling (reference for Interpretation) / Judgment of the Court of Justice of the European Union

Legal Issues

  1. 1 Whether Article 4(1) of Directive 90/435 precludes national legislation requiring dividends received by a parent company to be included in the tax base before a 95% deduction, with priority over other deductions that are time-limited.

Ratio Decidendi

Article 4(1) of Directive 90/435 precludes national legislation that requires dividends received by a parent company from its subsidiary to be included in the tax base before a 95% deduction, with any surplus carried forward indefinitely, and that deduction having priority over another tax deduction (such as DRC) that may only be carried forward for a limited time, as this may result in the loss of a tax advantage and indirect taxation of the dividends, contrary to the directive's objective of tax neutrality.

Court Disposition

Preliminary ruling: Article 4(1) of Directive 90/435 precludes such national legislation.

Orders

  • Article 4(1) of Directive 90/435/EEC, as amended, must be interpreted as precluding legislation of a Member State which provides that dividends received by a parent company from its subsidiary must first be included in the tax base of the parent company, before 95% of the amount of the dividends is then deducted,...