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On 2 September 2015, the Court of Justice of the European Union (CJEU) ruled in the Groupe Steria case. Taxand’s global international taxteam discusses the impact of this on France, Italy, the Netherlands and Spain.
They ruled that French rules that allow a French parent company a full exemption in respect of dividends received from domestic subsidiaries under a group taxation regime, but effectively tax (up to) 5% of dividends received from shareholdings in EU subsidiaries, are in breach of the freedom of establishment. With this ruling, the CJEU accepted the so called “per-element” approach of a group taxation regime.
As a consequence of this judgment, French parent companies of subsidiaries established in another Member State can claim the repayment of the corporate income tax paid on dividends received from these subsidiaries during 2013 and 2014 fiscal years, which can be evaluated to around 2% of the dividends.
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This ruling may also have an impact on regimes in other EU member states, especially countries which have a similar tax consolidation regime. In this tax alert we will analyse the potential impact of this decision on the tax regimes of the Netherlands, Spain and Italy.