P. Ferrero e C. SpA v Agenzia delle Entrate - Ufficio di Alba (C-338/08) and General Beverage Europe BV v Agenzia delle Entrate - Ufficio di Torino 1 (C-339/08).
Date: 2010-06-24
23. It should be borne in mind at the outset that it is clear from, inter alia, the third recital in the preamble to the Directive that the aim of the latter is to eliminate, through the introduction of a common tax system, any disadvantage to cooperation between companies in different Member States as compared with cooperation between companies within the same Member State and thereby facilitate the grouping together of companies at Community level. Thus, in order to avoid double taxation, Article 5(1) of the Directive provides for exemption from withholding tax in the Member State of the subsidiary when profits are distributed to the parent company, where the parent company holds a minimum of 25% of the capital of the subsidiary (see, to that effect, Case C‑58/01 Océ van der Grinten  [2003] ECR I‑9809, paragraph 45 and case-law cited).
25. The term ‘withholding tax’ in Article 5(1) of the Directive is not limited to certain specific types of national taxation (see Océ van der Grinten , paragraph 46). Moreover, the nature of a tax, duty or charge must be determined by the Court, under Community law, according to the objective characteristics by which it is levied, irrespective of its classification under national law (see Océ van der Grinten , paragraph 46).
26. In that regard, it is settled case-law that any tax on income received in the State in which dividends are distributed is a withholding tax on distributed profits for the purposes of Article 5(1) of the Directive where the chargeable event for the tax is the payment of dividends or of any other income from shares, the taxable amount is the income from those shares and the taxable person is the holder of the shares (see, inter alia, Océ van der Grinten , paragraph 47, and Case C‑284/06 Burda  [2008] ECR I‑4571, paragraph 52).
33. In that regard, the Court has held that a system under which the taxation of profits distributed by a subsidiary resident in a Member State to its parent company is subject to the same corrective tax mechanism (intended to prevent a tax credit from being granted for tax which has not been paid) regardless of whether the parent company is resident in the same Member State or in another Member State, although – unlike a resident parent company – a non-resident parent company is not granted a tax credit by the Member State in which its subsidiary is resident, is not contrary to freedom of establishment (see, to that effect, Burda , paragraph 96).
34. Moreover, the adjustment surtax itself cannot be regarded as a withholding tax prohibited under Article 5(1) of the Directive, since the taxable person is not the holder of the shares but the company making the distribution (see, to that effect, Burda , paragraphs 55 and 56).
40. Subject to those various reservations, it is found that the refund of the adjustment surtax at issue in the cases in the main proceedings is equivalent to a transfer of tax revenue from the Italian authorities to a Netherlands company and that, consequently, it cannot be considered to be income from shares (see, by analogy, Océ van der Grinten , paragraph 56).
45. In that regard, it should first be borne in mind that, since it is a derogation from the general principle prohibiting withholding taxes on distributed profits laid down in Article 5(1) of Directive 90/435, Article 7(2) of that directive is to be interpreted strictly (see Océ van der Grinten , paragraph 86).
46. Next, although, as can be seen from its title, the bilateral convention pursues the objective of preventing double taxation in the area of tax charged on income and capital, the withholding tax at issue in the cases in the main proceedings could be regarded as within the scope of Article 7(2) of the Directive only if, first, the bilateral convention contained provisions intended to eliminate or mitigate the economic double taxation of dividends and, secondly, the charging of that withholding tax was not such as to cancel out the effects thereof (see, inter alia, on the latter condition, Océ van der Grinten , paragraph 87), a matter which it would be for the referring court to assess.