Judgment;Summary — ECLI:EU:C:2025:176
Date: 2025-03-13
Language of the case: French
Court formation: Sixth Chamber
Subject matter: Taxation;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Belgium

summary, that method 
provides that the dividends distributed by the subsidiary are first included in the 
tax base of the parent company and then deducted from that tax base, provided the 
legal requirements are met. If the DTI is higher than the company’s tax base, the 
surplus DTI may be carried forward to subsequent periods (third paragraph of 
Article 205 CIR 92). 
(ii) Belgian system of intra-group transfers 
16. 
… 2 … The system of intra-group transfers [, in the version applicable to the 
present case, 3] entered into force on 1 January 2019 … 
The system of intra-group transfers allows, under very strict conditions, Belgian 
companies that are profit-making to transfer some or all of their profits to 
companies in the same group that would have incurred losses during the same tax 
period. 
For the company making the transfer, the amount transferred is deductible for the 
purposes of corporation tax (Article 205/5 CIR 92). 
For the company receiving the transfer, the amount transferred is included in the 
tax base. Losses for the current year can be used to reduce its tax base. 
(iii) Belgian DTI scheme and partial tax consolidation 
17. 
Under [the eighth paragraph of Article 207 CIR 92, as applicable at the material 
time] …, the DTI for the current year cannot be set off against the intra-group 
transfer received …. 
… [that provision] stated that ‘none of the deductions provided for in Articles 
[202 and 203 CIR] may be applied to the amount of the intra-group transfer 
 
1 Judgment of 12 February 2009, Cobelfret, C-138/07, ECLI:EU:C:2009:82. 
2 … 
3 Belgian Official Gazette, 10 August 2018, p. 62656. 
REQUEST FOR A PRELIMINARY RULING OF 29. 1. 2024 – C-135/24 
 
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referred to in the first subparagraph of Article 185(4), which is included in the tax 
base’. 
The same ban was reproduced in the eighth indent of the first subparagraph of 
Article 206/3(1) CIR 92. 
Since, under the eighth subparagraph of Article 207 CIR 92, no deduction 
(including DTI) may be applied to the amount of the intra-group transfer, that 
amount thus constitutes a ‘minimum tax base’. 
John Cockerill points out that its tax base for the 2020 tax year amounts to 
EUR 44 142 423.75 …, that is to say, an amount equal to the Transfer, plus 
an amount corresponding to [part of] the vehicle expenses … 
(EUR 444 599.22), on [which] a limit on the deduction of DTI also applies 
(the seventh paragraph of Article 207 CIR, as applicable at the material 
time). 
The corporation tax due on that amount is EUR 13 057 328.95. 
If John Cockerill had received no dividends during the financial year in 
dispute, its tax base would have been negative (EUR -4 854 452.59). In that 
case, no corporation tax would have been due for that financial year. 
(iv) Summary of the positions of the parties 
18. 
John Cockerill notes that the system of intra-group transfers under Belgian law 
does not allow DTI for the current year to be deducted from the intra-group 
transfer received. John Cockerill finds that it is thus deprived of a ‘tax advantage’. 
It notes a difference in treatment contrary to the Directive when comparing the 
situation of a company that receives dividends that are exempt under the Directive 
with a company that does not (when both have benefited from the same intra-
group transfer). 
John Cockerill also considers that refusing a tax advantage provided for by 
Belgian domestic law to a company that has received exempt dividends amounts 
to taxing the dividends in breach of the Directive. 
Lastly, according to John Cockerill, even though the DTI that could not be set off 
against the intra-group transfer received may be carried forward, this does not 
alter the fact that the system is contrary to the Directive. To tax dividends and then 
allow a deduction to be carried forward to subsequent periods does not equate to 
an exemption of those dividends. In addition, in its view, the ban on deducting 
DTI for the current year from the intra-group transfer received does not constitute 
an anti-abuse provision. 
19. 
JOHN COCKERILL 
 
7 
For its part, the Belgian State points out that, under the applicable system, DTI 
represented by dividends that cannot be deducted under the eighth paragraph of 
Article 207 CIR 92 may be carried forward to subsequent periods. 
The Belgian State then recalls that the Parent-Subsidiary Directive ‘shall not 
preclude the application of domestic or agreement-based provisions required for 
the prevention of fraud or abuse’ (Article 1(2) of the Directive). 
Therefore, according to the Belgian State, while it is true that the deletion of the 
third paragraph of Article 205/5 CIR 92 no longer prohibits companies that are 
party to an intra-group agreement from transferring more than is required simply 
to offset the loss of the company receiving the transfer, such a surplus transfer will 
be neutralised by the application of the eighth paragraph of Article 207 CIR 92. 
According to the Belgian State, the latter provision reduces the incentive for a 
transfer that exceeds the tax loss of the recipient company. The original intention 
of the legislature to limit such intra-group transfers thus remains unchanged. 
Considering the purpose of the system of intra-group transfers, which is to ensure 
a fair balance between profits and losses incurred within a group of companies, 
the provision contained in the eighth paragraph of Article 207 CIR 92 constitutes 
a ‘limitation’ aimed at thwarting any attempt to abuse the system of intra-group 
transfers by neutralising the advantages that would result from excessive intra-
group transfers and at preventing the distortion of competition within the internal 
market. 
Lastly, the Belgian State insists on the voluntary and free nature of the intra-group 
system and draws a parallel with the system of exceptional and gratuitous 
advantages. According to the Belgian State, the application of the eighth 
paragraph of Article 207 CIR 92 is an integral part of the system of intra-group 
transfers. 
Analysis of the Court 
20. 
The Court finds that the Court of Justice … has established the direct effect of 
Article 4(1) of the Parent-Subsidiary Directive. 4 
21. 
In addition, various judgments of the Court of Justice … 5 6 have dealt with 
similar issues, including the judgment of 19 December 2019, 7 where it is recalled 
that the Directive: 
 
4 The direct effect is recalled, inter alia, in advance tax ruling No 2019.0935 of 19 November 
2019. 
REQUEST FOR A PRELIMINARY RULING OF 29. 1. 2024 – C-135/24 
 
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‘prohibits Member States from taxing the parent company in respect of the 
profits distributed by its subsidiary … and that that prohibition also applies 
to national legislation which, although it does not tax the dividends received 
by the parent company in themselves, may have the effect that the parent 
company is subject indirectly to taxation on those dividends.’ 
According to the Belgian State, however, that case-law cannot be transposed 
because the Directive only protects the parent company receiving the dividends. 
Furthermore, under the system of Belgian law applicable to the main proceedings, 
the recipient of the transfer is not the taxpayer who receives the tax advantage. 
In any event, the Court finds that in the present case, an analysis of the case-law of 
the Court of Justice … raises a difficulty in the interpretation of EU law. 8 
[wording of the question referred for a preliminary ruling reproduced in the 
operative part] … 
      
5 Judgment of 12 February 2009, Cobelfret, C-138/07: 
 ‘The first indent of Article 4(1) of Directive 90/435 on the common system of taxation applicable 
in the case of parent companies and subsidiaries of different Member States is to be interpreted 
as precluding legislation of a Member State which provides that the dividends received by a 
parent company are to be included in the latter’s basis of assessment, to be subsequently 
deducted in the amount of 95%, to the extent to which the parent company has, for the tax 
period in question, a positive profit balance after other exempted profits have been deducted.’ 
‘The first indent of Article 4(1) of Directive 90/435 is unconditional and sufficiently precise to 
be capable of being relied on before national courts.’ 
6 Judgment of 26 October 2017, Argenta Spaarbank (C-39/16, ECLI:EU:C:2017:813, 
paragraph 52): 
 ‘Second, it must be held that the rule established in Article 4(2) of Directive 90/435 would 
negate the effectiveness of the rule set out in Article 4(1) of that directive if that first rule had to 
be interpreted as allowing Member States to preclude the deduction, from the taxable profits of 
a parent company, of all interest charged in respect of loans up to an amount equal to the 
amount of dividends, which benefit from a tax exoneration, that the parent company receives 
from its holding in the capital of a subsidiary, without that non-deductibility being limited to 
interest charges relating to the financing of that holding which pays out those dividends. Such 
an interpretation would equate to allowing those Member States to increase indirectly the 
taxable profits of a parent company, thereby affecting the neutrality, from the tax point of view, 
of the distribution of dividends paid by a subsidiary located in one Member State to its parent 
company established another Member State.’ 
7 Judgment of 19 December 2019, Brussels Securities (C-389/18, paragraph 45): ‘It is therefore 
apparent that the combination of the DTI scheme applicable to dividends received, the order of 
deductions set out in national legislation, and the time limit on the ability to use DRC can have 
the effect that receiving dividends is likely to result in the parent company losing another tax 
advantage provided for by national legislation, and, therefore, that company being taxed more 
heavily than would have been the case if it had not received dividends from its non-resident 
subsidiary or if, as the referring court states, the dividends had simply been excluded from the 
parent company’s tax base.’ 
8 See also the Finance Minister’s answer to Peter De Roover’s Parliamentary Question No 1301 
of 11 January 2023, available at www.fisconetplus.be  
JOHN COCKERILL 
 
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ON THOSE GROUNDS, 
The Court, ruling inter partes; [procedural wording] 
… 
holds that the following questions should be referred to the Court of Justice of the 
European Union for a preliminary ruling: 
• Does Article 4 of Directive 2011/96/EU have direct effect and, 
combined with other sources of EU law, must it be interpreted as 
precluding legislation of a Member State: 
(i) which introduces a tax consolidation system (the intra-group 
transfer) allowing groups of companies to transfer, under certain 
conditions, some or all of the taxable profits made by some 
subsidiaries to other subsidiaries that have incurred losses in the 
tax year (the intra-group transfer), and 
(ii) which excludes from that advantage loss-making companies, for 
the amount of the dividends received, which qualify for 
exemption under the legislation of the Member State transposing 
Directive 2011/96/EU? 
• Is that legislation likely to fall within the scope of Article 1(2) of 
Directive 2011/96/EU, which states that it ‘shall not preclude the 
application of domestic or agreement-based provisions required for the 
prevention of fraud or abuse’? … 
[procedural wording and signatures] 
…