# C_2006331EN.01000302.xml

| 30.12.2006 | EN | Official Journal of the European Union | C 331/3 |
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30.12.2006

EN

Official Journal of the European Union

C 331/3

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Judgment of the Court (Grand Chamber) of 12 December 2006 (reference for a preliminary ruling from the High Court of Justice of England and Wales, Chancery Division, United Kingdom) — Test Claimants in Class IV of the ACT Group Litigation v Commissioners of Inland Revenue

(Case C-374/04) (1)

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(Freedom of establishment - Free movement of capital - Corporation tax - Payment of dividends - Tax credit - Separate treatment of resident and non-resident shareholders - Bilateral double taxation conventions)

(2006/C 331/05)

Language of the case: English

Referring court

High Court of Justice of England and Wales, Chancery Division

Parties to the main proceedings

Applicants: Test Claimants in Class IV of the ACT Group Litigation

Applicants:

Defendant: Commissioners of Inland Revenue

Defendant:

Re:

Reference for a preliminary ruling — High Court of Justice of England and Wales, Chancery Division — National legislation on corporation tax — Retention at source (‘advance corporation tax’) applied to the profits distributed by a subsidiary to a parent company — Tax credit designed to take account of a retention made upstream — Benefit of the tax credit limited to residents and to residents of certain other Member States party to a convention for avoiding double taxation containing a clause to that effect — Liability of a Member State for breach of Community law — Form of redress

Operative part of the judgment

| 1. | Articles 43 EC and 56 EC do not prevent a Member State, on a distribution of dividends by a company resident in that State, from granting companies receiving those dividends which are also resident in that State a tax credit equal to the fraction of the corporation tax paid on the distributed profits by the company making the distribution, when it does not grant such a tax credit to companies receiving such dividends which are resident in another Member State and are not subject to tax on dividends in the first State; |
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1.

Articles 43 EC and 56 EC do not prevent a Member State, on a distribution of dividends by a company resident in that State, from granting companies receiving those dividends which are also resident in that State a tax credit equal to the fraction of the corporation tax paid on the distributed profits by the company making the distribution, when it does not grant such a tax credit to companies receiving such dividends which are resident in another Member State and are not subject to tax on dividends in the first State;

| 2. | Articles 43 EC and 56 EC do not preclude a situation in which a Member State does not extend the entitlement to a tax credit provided for in a double taxation convention concluded with another Member State for companies resident in the second State which receive dividends from a company resident in the first State to companies resident in a third Member State with which it has concluded a double taxation convention which does not provide for such an entitlement for companies resident in that third State. |
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2.

Articles 43 EC and 56 EC do not preclude a situation in which a Member State does not extend the entitlement to a tax credit provided for in a double taxation convention concluded with another Member State for companies resident in the second State which receive dividends from a company resident in the first State to companies resident in a third Member State with which it has concluded a double taxation convention which does not provide for such an entitlement for companies resident in that third State.

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(1)  OJ C 273, 6.11.2004.

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