CJEU – Recent Developments in Direct Taxation 2018

1. S. 80Joined Cases C-504/16, C-613/16 – Deister Holding and Juhler Holding; Case C-440/17 – GS

These three cases were referred to the CJEU by the regional tax court of Cologne by way of requests for preliminary rulings under Article 267 of the TFEU. The first two cases were evaluated jointly, a ruling was delivered by judgment of the Court on 20 December 2017 without an Opinion having been provided by the Advocate General. The decision of the Court in the GS case was issued on 14 June 2018.

The cases deal with Section 50d para. 3 of the German Income Tax Act, which contains restrictions on the refund of withholding tax under Section 50d para. 1 of that Act. Relief from withholding tax is denied for a foreign company where that company would not be entitled to such relief had it directly earned the income. More specifically, there are several conditions leading to the denial of the exemption. The former version of the provision – which was in place regarding the Deister Holding and Juhler Holding cases – prescribed non-eligibility if (i) either no business or other valid reason for inserting the foreign company existed; or (ii) the non-resident parent earned no more than 10 % of its enti...