CELEX: 62011CA0035
Language: en
Date: 2012-11-13 00:00:00
Title: Case C-35/11: Judgment of the Court (Grand Chamber) of 13 November 2012 (reference for a preliminary ruling from the High Court of Justice (Chancery Division) — United Kingdom) — Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue, The Commissioners for Her Majesty’s Revenue & Customs (Articles 49 TFEU and 63 TFEU — Payment of dividends — Corporation tax — Case C-446/04 — Test Claimants in the FII Group Litigation — Interpretation of the judgment — Prevention of economic double taxation — Equivalence of the exemption and imputation methods — Meaning of ‘tax rates’ and ‘different levels of taxation’ — Dividends from third countries)

12.1.2013   
            
            
               EN
            
            
               Official Journal of the European Union
            
            
               C 9/9
            
         Judgment of the Court (Grand Chamber) of 13 November 2012 (reference for a preliminary ruling from the High Court of Justice (Chancery Division) — United Kingdom) — Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue, The Commissioners for Her Majesty’s Revenue & Customs
   (Case C-35/11) (1)
   
   (Articles 49 TFEU and 63 TFEU - Payment of dividends - Corporation tax - Case C-446/04 - Test Claimants in the FII Group Litigation - Interpretation of the judgment - Prevention of economic double taxation - Equivalence of the exemption and imputation methods - Meaning of ‘tax rates’ and ‘different levels of taxation’ - Dividends from third countries)
   2013/C 9/13
   Language of the case: English
   
      Referring court
   
   High Court of Justice (Chancery Division)
   
      Parties to the main proceedings
   
   
      Claimants: Test Claimants in the FII Group Litigation
   
      Defendants: Commissioners of Inland Revenue, The Commissioners for Her Majesty’s Revenue & Customs
   
      Re:
   
   Reference for a preliminary ruling — High Court of Justice (Chancery Division) — Interpretation of Articles 49 TFEU and 63 TFEU — Freedom of establishment — Free movement of capital — Tax legislation — Corporation tax — Interpretation of the Court’s judgment of 12 December 2006 in Case C-446/04 Test Claimants in the FII Group Litigation — Meaning of ‘tax rates’ and ‘different levels of taxation’ — Tax rate to be taken into account for the purpose of determining whether the levels of taxation are the same for naturally-sourced and foreign-sourced dividends
   
      Operative part of the judgment
   
   
               1.
            
            
               Articles 49 TFEU and 63 TFEU must be interpreted as precluding legislation of a Member State which applies the exemption method to nationally-sourced dividends and the imputation method to foreign-sourced dividends if it is established, first, that the tax credit to which the company receiving the dividends is entitled under the imputation method is equivalent to the amount of tax actually paid on the profits underlying the distributed dividends and, second, that the effective level of taxation of company profits in the Member State concerned is generally lower than the prescribed nominal rate of tax.
            
         
               2.
            
            
               The answers given by the Court to the second and fourth questions asked in the case which gave rise to the judgment of 12 December 2006 in Case C-446/04 Test Claimants in the FII Group Litigation also apply where:
               
                           —
                        
                        
                           the foreign corporation tax to which the profits underlying the distributed dividends have been subject was not or was not wholly paid by the non-resident company paying those dividends to the resident company, but was paid by a company resident in a Member State that is a direct or indirect subsidiary of the first company;
                        
                     
                           —
                        
                        
                           advance corporation tax has not been paid by the resident company which receives the dividends from a non-resident company, but was paid by its resident parent company under a group income election.
                        
                     
         
               3.
            
            
               European Union law must be interpreted as meaning that a parent company resident in a Member State, which in the context of a group taxation scheme, such as the group income election at issue in the main proceedings, has, in breach of the rules of European Union law, been compelled to pay advance corporation tax on the part of the profits from foreign-sourced dividends, may bring an action for repayment of that unduly levied tax in so far as it exceeds the additional corporation tax which the Member State in question was entitled to levy in order to make up for the lower nominal rate of tax to which the profits underlying the foreign-sourced dividends were subject compared with the nominal rate of tax applicable to the profits of the resident parent company.
            
         
               4.
            
            
               European Union law must be interpreted as meaning that a company that is resident in a Member State and has a shareholding in a company resident in a third country giving it definite influence over the decisions of the latter company and enabling it to determine its activities may rely upon Article 63 TFEU in order to call into question the consistency with that provision of legislation of that Member State which relates to the tax treatment of dividends originating in the third country and does not apply exclusively to situations in which the parent company exercises decisive influence over the company paying the dividends.
            
         
               5.
            
            
               The reply given by the Court to the third question asked in the case which gave rise to the judgment in Test Claimants in the FII Group Litigation does not apply where the subsidiaries established in other Member States to which advance corporation tax could not be surrendered are not subject to tax in the Member State of the parent company.
            
         
      (1)  OJ C 103, 2.4.2011.