Clifford Chance
Newsletter Tax, December 2011 'The effect of German withholding tax on dividends breaches EU law'
22 December 2011
On 20 October 2011, the European Court of Justice (ECJ) decided that the effect (Abgeltungswirkung) of German withholding tax on dividends distributed to non-German EU or EEA resident corporate shareholders constitutes a restriction on EU free movement of capital (EU-Kapitalverkehrsfreiheit), because German resident corporate shareholders receive a tax credit or tax rebate in the amount of such withholding tax. The ECJ did not limit its decision to future dividend distributions, so it should also apply retrospectively.
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