# C_2012157EN.01000202.xml

| 2.6.2012 | EN | Official Journal of the European Union | C 157/2 |
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Reference for a preliminary ruling from the Kúria (Hungary) lodged on 1 March 2012 — Franklin Templeton Investment Funds Sociéte d’Investissement à Capital Variable v Nemzeti Adó- és Vámhivatal Kiemelt Ügyek és Adózók Adó Főigazgatósága

(Case C-112/12)

2012/C 157/03

Language of the case: Hungarian

Referring court

Kúria

Parties to the main proceedings

Applicant: Franklin Templeton Investment Funds Sociéte d’Investissement à Capital Variable

Defendant: Nemzeti Adó- és Vámhivatal Kiemelt Ügyek és Adózók Adó Főigazgatósága (Hungary)

Questions referred

| 1. | Is the exemption from tax on dividends granted by the Hungarian legislation to a recipient of dividends resident in Hungary compatible with the provisions of the EU Treaties on the principle of freedom of establishment (Article 49 TFEU), the principle of equal treatment (Article 54 TFEU) and the principle of free movement of capital (Article 56 TFEU (sic)), given that
(a)
a non-resident recipient of dividends is exempt from tax on dividends only if it meets certain legal requirements, namely that its holding (in the case of shares, the proportion of its registered shares) in the company capital of the resident company at the time of distribution (allocation) of dividends amounted permanently to at least 20 % for at least two consecutive years, taking account of the fact that, in the event that the permanent holding of 20 % is maintained for less than two consecutive years, the company distributing the dividends is not obliged to withhold the tax on the dividends and the company which receives the dividends or, in the event of non-monetary allocations, the company which distributes them are not obliged to pay that tax on submission of their tax return if another person or the party distributing the dividends has guaranteed the payment of the tax; (b)
further, a non-resident recipient of dividends does not meet the requirements of the national legislation for exemption from tax when its holding (in the case of shares the proportion of its registered shares) in the company capital of a resident company at the time of distribution (allocation) of dividends is below the minimum level of 20 % required by law, or when it has not maintained that percentage permanently for at least two consecutive years, or, in the event that the permanent holding of 20 % has been maintained for less than two consecutive years, if payment of the tax was not guaranteed by any third party or by the party distributing the dividends; | (a) | a non-resident recipient of dividends is exempt from tax on dividends only if it meets certain legal requirements, namely that its holding (in the case of shares, the proportion of its registered shares) in the company capital of the resident company at the time of distribution (allocation) of dividends amounted permanently to at least 20 % for at least two consecutive years, taking account of the fact that, in the event that the permanent holding of 20 % is maintained for less than two consecutive years, the company distributing the dividends is not obliged to withhold the tax on the dividends and the company which receives the dividends or, in the event of non-monetary allocations, the company which distributes them are not obliged to pay that tax on submission of their tax return if another person or the party distributing the dividends has guaranteed the payment of the tax; | (b) | further, a non-resident recipient of dividends does not meet the requirements of the national legislation for exemption from tax when its holding (in the case of shares the proportion of its registered shares) in the company capital of a resident company at the time of distribution (allocation) of dividends is below the minimum level of 20 % required by law, or when it has not maintained that percentage permanently for at least two consecutive years, or, in the event that the permanent holding of 20 % has been maintained for less than two consecutive years, if payment of the tax was not guaranteed by any third party or by the party distributing the dividends; |
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| (a) | a non-resident recipient of dividends is exempt from tax on dividends only if it meets certain legal requirements, namely that its holding (in the case of shares, the proportion of its registered shares) in the company capital of the resident company at the time of distribution (allocation) of dividends amounted permanently to at least 20 % for at least two consecutive years, taking account of the fact that, in the event that the permanent holding of 20 % is maintained for less than two consecutive years, the company distributing the dividends is not obliged to withhold the tax on the dividends and the company which receives the dividends or, in the event of non-monetary allocations, the company which distributes them are not obliged to pay that tax on submission of their tax return if another person or the party distributing the dividends has guaranteed the payment of the tax; | | | | |
| (b) | further, a non-resident recipient of dividends does not meet the requirements of the national legislation for exemption from tax when its holding (in the case of shares the proportion of its registered shares) in the company capital of a resident company at the time of distribution (allocation) of dividends is below the minimum level of 20 % required by law, or when it has not maintained that percentage permanently for at least two consecutive years, or, in the event that the permanent holding of 20 % has been maintained for less than two consecutive years, if payment of the tax was not guaranteed by any third party or by the party distributing the dividends; | | | | |

| 2. | Would the answer to question 1(b) be different, that is to say, would there be any effect on the answer, if:
(a)
while a resident recipient of dividends is exempt from tax on dividends under the Hungarian legislation, the tax burden of a non-resident recipient of dividends depends on the applicability to it of [Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States] or the [Convention between the Republic of Hungary and the Grand Duchy of Luxembourg for the avoidance of double taxation with respect to taxes on income and on capital, done at Budapest on 15 January 1990], (b)
while a resident recipient of dividends is exempt from tax on dividends under the Hungarian legislation, a non-resident recipient of dividends may either offset such tax against its national tax or bear the final burden, depending on the provisions of its national law. | (a) | while a resident recipient of dividends is exempt from tax on dividends under the Hungarian legislation, the tax burden of a non-resident recipient of dividends depends on the applicability to it of [Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States] or the [Convention between the Republic of Hungary and the Grand Duchy of Luxembourg for the avoidance of double taxation with respect to taxes on income and on capital, done at Budapest on 15 January 1990], | (b) | while a resident recipient of dividends is exempt from tax on dividends under the Hungarian legislation, a non-resident recipient of dividends may either offset such tax against its national tax or bear the final burden, depending on the provisions of its national law. |
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| (a) | while a resident recipient of dividends is exempt from tax on dividends under the Hungarian legislation, the tax burden of a non-resident recipient of dividends depends on the applicability to it of [Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States] or the [Convention between the Republic of Hungary and the Grand Duchy of Luxembourg for the avoidance of double taxation with respect to taxes on income and on capital, done at Budapest on 15 January 1990], | | | | |
| (b) | while a resident recipient of dividends is exempt from tax on dividends under the Hungarian legislation, a non-resident recipient of dividends may either offset such tax against its national tax or bear the final burden, depending on the provisions of its national law. | | | | |

| 3. | May the national tax authority invoke Article 65(1) TFEU (formerly Article 58(1) EC) and the former Article 220 EC in order to disapply Community law of its own motion? |
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