Judgment — ECLI:EU:C:2024:1048
Date: 2024-12-19
Language of the case: Spanish
Court formation: Sixth Chamber
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling
Origin: Spain

Summary C-601/23 – 1 
Case C-601/23 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
29 September 2023 
Referring court: 
Tribunal Superior de Justicia del País Vasco (Spain) 
Date of the decision to refer: 
19 September 2023 
Applicant: 
Credit Suisse Securities (Europe) Ltd 
Defendant: 
Tribunal Económico-Administrativo Foral de Bizkaia (TEAFB) 
  
Subject matter of the main proceedings 
Administrative proceedings – Taxation applicable to income from profit 
distribution – Complaint lodged by a company not resident in Spain – Possible 
difference in treatment compared with companies resident in Spain – A non-
resident company that has suffered losses during a financial year CANNOT 
recover amounts withheld at source as Income Tax for Non-Residents compared 
with the fact that a resident company that has suffered losses during a financial 
year CAN recover the amounts withheld at source as Corporate Income Tax 
Subject matter and legal basis of the request 
Request for a preliminary ruling on interpretation – Article 267 TFEU – 
Compatibility of national provisions with Article 63 TFEU 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-601/23 
 
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Question referred for a preliminary ruling 
‘Must Article 63 of the Treaty on the Functioning of the European Union on 
the free movement of capital be interpreted as precluding the fact that the 
Kingdom of Spain, and in particular the fiscally autonomous Province of 
Bizkaia, despite applying the same percentage to non-residents as to 
residents, does not reimburse to non-residents the withholding tax levied on 
the payment of dividends by a resident entity – which cannot be compensated 
on the basis of the convention on the elimination of double taxation – whereas 
residents who likewise suffer losses during the financial year are reimbursed 
that tax in full?’ 
Provisions of international law relied on 
Convention between the United Kingdom of Great Britain and Northern Ireland 
and the Kingdom of Spain for the avoidance of double taxation and the prevention 
of fiscal evasion with respect to taxes on income and capital and the Protocol 
thereto, signed in London on 14 March 2013. In accordance with Article 10 of that 
convention, dividends paid by a company which is a resident of a Contracting 
State to a resident of the other Contracting State may also be taxed in the 
Contracting State of which the company paying the dividends is a resident and 
according to the laws of that State, but with the following limitation: if the 
beneficial owner of the dividends is a resident of the other Contracting State, the 
tax so charged shall not exceed, as a general rule, 10 per cent of the gross amount 
of the dividends. For its part, Article 22 lays down a number of rules for the 
elimination of double taxation. In particular, it is apparent from paragraph 2 of 
that article that, for the withholding tax to be deductible, there must be profits or 
chargeable gains. 
Provisions of European Union law relied on 
Article 63 of the Treaty on the Functioning of the European Union. 
Judgments of the Court of Justice of the European Union, in particular of 
22 November 2018, Sofina and Others (C-575/17, EU:C:2018:943), and of 
16 June 2022, ACC Silicones (C-572/20, EU:C:2022:469). 
Provisions of national law relied on 
Ley 12/2002, de 23 de mayo, por la que se aprueba el Concierto Económico con la 
Comunidad Autónoma del País Vasco (Law 12/2002 of 23 May 2002 approving 
the Economic Agreement with the Autonomous Community of the Basque 
Country). Article 21 of that law provides that the income tax on non-residents is a 
coordinated tax (that is to say that it is regulated, managed and levied by the 
CREDIT SUISSE SECURITIES (EUROPE) 
 
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provinces of the Basque Country), which is governed by the same substantive and 
formal rules as those laid down at any time by the State. 
Norma Foral 12/2013, de 5 de diciembre, del Impuesto sobre la Renta de no 
Residentes (Provincial Law 12/2013 of 5 December 2013 on Income Tax for Non-
Residents, IRNR). Article 1 of that law states that this tax is levied on the income 
earned in the Province of Bizkaia by natural persons or entities who are not 
resident in Spanish territory and who do not have a permanent establishment. 
Article 4 recognises that the provisions of the IRNR are without prejudice to the 
provisions of the international treaties and conventions that form part of the 
Spanish domestic legal order. Article 13 treats dividends and other income from 
participation in the capital of private entities as income earned in Bizkaia. 
Article 25 sets a general IRNR tax rate of 24%. However, that rate is 19% for 
taxpayers resident in another Member State of the European Union or the 
European Economic Area. Furthermore, Article 31 imposes a withholding tax or 
advance payment on entities resident in Spanish territory that pay income subject 
to that tax. That withholding tax or advance payment is equal to the amount 
resulting from the application of the provisions under which the amount of tax 
payable is determined. 
Norma Foral 11/2013, de 5 de diciembre, del Impuesto sobre Sociedades 
(Provincial Law 11/2013 of 5 December 2013 on Corporate Income Tax, IS). 
Article 68 provides that the withholding tax and advance payments are deductible 
from the actual tax due. If the amount of the withholding tax and advance 
payments exceeds the actual tax due, the tax authority is required to repay the 
excess automatically. Moreover, Article 130 states that entities that pay income 
subject to this tax are required to withhold or make advance payments, by way of 
payments on account, of the amount determined by the regulations and are 
required to pay that amount to the Hacienda Foral (Provincial Treasury). 
Succinct presentation of the facts and procedure in the main proceedings 
1 The company CREDIT SUISSE SECURITIES (EUROPE) LIMITED, resident in 
the United Kingdom and having no permanent establishment in territory of the 
Province of Bizkaia, received, in financial year 2017, the sum of 
EUR 2 763 848.73 in dividends distributed by a company resident in Bizkaia, 
Siemens Gamesa Renewable Energy, S.A. In accordance with the applicable 
legislation, Siemens Gamesa Renewable Energy, in its tax self-assessments, 
withheld a deduction at source of the income tax for non-residents due from 
Credit Suisse Securities (Europe) in respect of the dividends distributed to the 
latter. That withholding, based on the domestic tax rules, was set at 19%, a rate 
equal to that applied to residents, reduced to 9% under application to Credit Suisse 
Securities (Europe) of the UK-Spain Double Taxation Convention (DTC), which 
limits the rate to 10%, which results in an amount of EUR 276 384.87. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-601/23 
 
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2 On 10 February 2021, Credit Suisse Securities (Europe) applied to the Servicio de 
Tributos Directos de la Hacienda Foral de Bizkaia (Direct Tax Department of the 
Provincial Treasury of Bizkaia) for rectification of the self-assessments submitted 
by the withholding company (Siemens Gamesa Renewable Energy) and also 
requested reimbursement of the 9% on the grounds that this was undue income. In 
this respect, Credit Suisse Securities (Europe) first stated that, during that tax year, 
it had incurred losses. It argued that, in this case, unlike companies resident in 
Bizkaia that may be in the same situation as regards losses – which would recover 
that 9% difference through corporate income tax (to which resident companies are 
subject), given that, for those companies, the withholding tax is, in nature, a 
withholding ‘on account’ of the amount of tax to be paid, such that once the actual 
amount of tax has been calculated, if the amount withheld is greater than the 
resulting amount, the difference would be reimbursed automatically – it could not 
recover the 9% difference in its country of residence (United Kingdom). That 
application was dismissed by the Provincial Treasury of Bizkaia by means of a 
decision of 15 February 2021. 
3 On 18 March 2021, Credit Suisse Securities (Europe) brought a complaint against 
that decision before the Tribunal Económico-Administrativo Foral de Bizkaia 
(Bizkaia Provincial Tax Tribunal, TEAFB). Its arguments were based on the 
premiss that Provincial Law 12/2013 of 5 December 2013 on Income Tax for 
Non-Residents gives rise to discriminatory treatment of non-resident taxpayers 
where these incur tax losses: while resident taxpayers would obtain a refund of the 
withholding tax if they incurred such losses, as a non-resident entity, Credit Suisse 
Securities (Europe) could not receive such refund. In its arguments, it relied in 
particular on the judgment of the Court of Justice of 22 November 2018 in Case 
C-575/17. 
4 By means of an agreement of 23 February 2022, the TEAFB dismissed that 
complaint. In its legal basis, the TEAFB made extensive reference to the 
precedents of the Court of Justice and the provincial legislation in force and 
concluded that there were no grounds for reimbursement of the sum withheld. It 
considered that there were differences between the situation at issue in the present 
case and that examined by the Court of Justice in Sofina and Others, because the 
latter involved a situation in which dividends paid by a French company to non-
resident companies were subject to a withholding tax of 25 per cent of their 
amount, reducible on the basis of a possible DTC. In contrast, in the present case, 
the dividends received by a resident company would be included in the basis of 
assessment for corporate income tax and, in the case of losses, taxation would be 
carried forward to the next positive financial year (which presupposes a cash-flow 
advantage and even a lack of taxation if the company does not once again achieve 
a sufficient positive result before it ceases trading), whereas dividends received by 
a non-resident company are taxed immediately and definitively. 
5 In such a situation, the TEAFB emphasised that there was no difference in 
treatment as found in the Court of Justice’s judgment in Sofina and Others, since 
the provincial legislation applicable in the present case establishes equal 
CREDIT SUISSE SECURITIES (EUROPE) 
 
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withholding tax percentages for residents and non-residents (19% in both cases), 
leading to a different tax scenario. For that purpose, the TEAFB cited points 40 
and 41 of the Opinion of Advocate General Wathelet in Case C-575/17. On the 
basis of those points, it emphasised the idea that the balanced allocation of the 
power to impose taxes may be ensured by non-discriminatory formulas, such as 
the levying of a common withholding tax on both groups, which is the measure 
specifically provided for by the provincial rules applicable in the present case. The 
TEAFB added that the judgment on equality was independent of the taxation 
applied by the United Kingdom and should be based solely on the taxation 
required in the Province of Bizkaia, such that any higher overall taxation on the 
shareholder is not relevant to the country of origin of the dividend where that 
country has established practices ensuring treatment that is equal to that of a 
resident. The TEAFB also rejected the fact that the claimant [Credit Suisse 
Securities (Europe)] had provided reliable evidence of its tax losses in 2017. 
6 On 4 May 2022, Credit Suisse Securities (Europe) brought an action against the 
aforementioned Agreement of the TEAFB before the Tribunal Superior de Justicia 
del País Vasco (High Court of Justice of the Basque Country). The applicant’s 
arguments and the defendant’s response are set out in the following section. 
The essential arguments of the parties in the main proceedings 
7 In its main application, Credit Suisse Securities (Europe) seeks the annulment of 
the TEAFB Agreement and recognition of its right to reimbursement of the sum of 
EUR 276 384.87, plus default interest. It relies exclusively on legal bases specific 
to EU law, which, in its understanding, support the view that there has been 
discriminatory treatment, based on the structure of the withholding tax levied on 
non-resident entities as a definitive tax, without any mechanism for 
reimbursement in the event of losses. In contrast, for resident companies subject to 
corporate income tax, the withholding is merely an advance payment of that tax 
and actual taxation only takes place if, during the tax year, that company has a 
positive tax base, as, in the case of a negative tax base, the amounts withheld are 
not subject to tax and are reimbursed. 
8 The applicant also relies on the case-law of the Court of Justice’s judgment in 
Case C-575/17 of 22 November 2018 and judgment issued in Case C-572/20, 
paragraphs 46 to 49 of which it transcribes, providing the key points of another 
precedent concerning taxation in Germany. After examining the possible 
offsetting on the basis of the UK-Spain Double Taxation Convention, the 
applicant infers that that convention does not allow for the compensation of losses 
given that Article 22.2 of that convention requires there to be profits or chargeable 
gains for the withholding tax to be deductible. The United Kingdom is not 
required to reimburse the withholding of input tax in Spain and only grants a tax 
credit in the case of a positive tax bill, and it also cannot be deducted in 
subsequent tax years. The applicant adds that the burden of proving such 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-601/23 
 
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offsetting rests with the tax authority in accordance with Spanish domestic case-
law. 
9 As regards provision of proof of tax losses in 2017, the applicant refers to several 
tax returns submitted in annex, among other documents. It also refers to internal 
constitutional principles (economic capacity) or case-law on restrictions on the 
free movement of capital linked to IRNR. 
10 Lastly, the applicant proposes that the referring court submit a request for a 
preliminary ruling before the Court of Justice or an objection of 
unconstitutionality before the Tribunal Constitucional (Constitutional Court of 
Spain). 
11 In its defence, the defendant (Diputación Foral de Bizkaia [Provincial Council of 
Bizkaia]) makes extensive reference to the applicable legislation and rejects the 
discrimination mentioned in the complaint in relation to resident entities, referring 
once again to the equal nature of the withholding tax which, after application of 
the DTC between Spain and the United Kingdom, is reduced to 9%. The 
defendant submits that the assumptions in the case-law relied on by the applicant, 
which concern collective investment undertakings (CIUs), based on Directive 
2009/65/EC, differ significantly from the situation at issue in the present case (as 
those cases concern taxation of 1% compared with non-identical taxation of 15 or 
18%, as in the present case), and cites, in particular, the judgment of the Tribunal 
Supremo (Supreme Court of Spain) of 5 January 2021. Furthermore, as regards 
the Court of Justice’s case-law in Case C-575/17, Sofina and Others, the 
TEAFB’s considerations are reiterated. Apart from the fact that it disputes the 
justifiability of submitting an objection of unconstitutionality, it expresses its 
opposition as regards the proof of tax losses during the financial year, which the 
applicant declares. 
12 On 13 June 2023, the court set a time limit for the parties to submit arguments on 
a possible referral of a request for a preliminary ruling. By means of letters dated 
28 and 29 June 2023, respectively, the parties reiterated their contradictory 
positions in relation to the referral of a request for a preliminary ruling. While the 
applicant made reference to the most recent decisions under domestic case-law 
(referring to the judgment of the Supreme Court of Spain of 5 April 2023 and 
several others that followed with the same principle) and referred again to the 
judgments of the Court of Justice in ACC Silicones or Sofina and Others, the 
defendant set out its position on the latest judgments of the Supreme Court of 
Spain and the differences that exist in relation to the present case and insisted that 
there was a lack of evidence to support the applicant’s losses. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
13 The referring court considers that it is appropriate to submit the request for a 
preliminary ruling sought by the applicant in view of the following doubts. 
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14 First, it should not be forgotten that, in domestic case-law, there are very many 
precedents concerning the difference in the tax treatment of non-residents 
compared with income earned in Spain. A recent example of that case-law is the 
judgment of the Supreme Court of 5 April 2023, on which the parties disagree. It 
is clear from that judgment – in the case of non-resident hedge or non-harmonised 
funds and their comparable resident funds in Spain – that, in accordance with the 
case-law of the Court of Justice, the offsetting of the effects of the restriction on 
the free movement of capital resulting from national legislation can only be 
considered to have been achieved by the provisions of the double taxation 
conventions in cases where those provisions allow the tax withheld at source 
under national legislation to be deducted from the tax payable in the other 
Member State up to the limit of the difference in treatment under national 
legislation. However, what defines the situation of non-resident companies in 
relation to resident companies, from the point of view of income tax for non-
residents, as regards the payment of company dividends is that both groups 
(residents and non-residents) are subject to the same tax rate, initially 19%, and 
this is the equalisation factor that leads the defendant authority to argue that there 
has been no infringement in relation to the free movement of capital, even though 
the indirect tax treatment of the two taxpayers is different. Therefore, in the case 
of the tax years in which losses are recorded, the mechanics of the corporate 
income tax leads to the full refund of the withholding tax to the resident company 
in all cases (Article 68.2 of Provincial Law on Corporate Income Tax) while, on 
the other hand, for non-residents, it is only hypothetically offset through double 
taxation conventions, a possibility which, in the case of the UK-Spain DTC of 
2013, is not satisfied in this case (Article 22.2). 
15 In the light of that case-law, the referring court considers that serious doubts 
remain as to whether the only criterion for establishing an infringement of 
Article 63 TFEU must be the disparity in the equivalent (withholding) tax rates 
between those two types of entity compared, as the defendant authority maintains. 
On the other hand, it appears that it is not the fact and time of withholding that is 
taken as reference, either separately or specifically, but the fact and time of actual 
and final taxation, as is apparent, for example, from the judgment of the Court of 
Justice of 16 June 2022 in Case C-572/20 (paragraph 49), to the extent that, not 
even if there were an uncertain possibility of recovering in the future the total 
withholding levied in the State of residence (the UK), would the difference in 
treatment be considered to be offset through the double taxation convention. In 
this sense, it is not possible to assert that domestic law can disregard the fact that, 
by means of the double taxation convention, the company subject to withholding 
tax may or may not be able to offset the final excess tax compared with a resident, 
which the defendant authority argues to be a mere hypothesis outside its scope of 
action. By contrast, the public authorities of the withholding State (or tax regime) 
will have to verify, at the request of the party concerned, whether, in the light of 
the rules of the Treaties and EU law, the offsetting has been achieved, and, if not, 
reimburse the difference as undue revenue. 
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16 Finally, the referring court notes that the parties have not set out their views as to 
the matter’s being concerned with entities subject to income tax for non-residents 
that have recorded negative results. In that court’s view, this should likewise have 
no bearing on the referral of the request for a preliminary ruling, as, despite there 
being a contradiction between the parties as to the facts and proof of that question, 
it is an issue that should not be prejudged at this stage, as it will have to be 
resolved in the final judgment.