ECJ - Recent Developments in Direct Taxation 2012

S. 141Hungary: Franklin Templeton C-112/12

S. 1431. Introduction

This is a very simple case about discrimination between Hungarian resident taxpayers and taxpayers resident in other EU Member States. Hungary joined the EU in 2004. However, some provisions in the tax law have remained discriminatory for some time.

2. Facts

Franklin Templeton Investment Funds Sociéte d’Investissement à Capital Variable was a resident company of Luxembourg. During tax year 2005 Franklin Templeton received dividends from Hungary. A 20% tax was withheld by the source state. Some years later Franklin Templeton filed a claim to the Hungarian tax administration (Nemzeti Adó- és Vámhivatal) about the refund of the tax withheld on dividends. The Hungarian tax administration refused to refund the tax. The case reached the Supreme Court of Hungary (Kúria) and was referred to the Court of Justice of the European Union (hereinafter ECJ) under case number C-112/12.

The questions of the Kúria are the following:

“Is the exemption from tax on dividends granted by the Hungarian legislation to a recipient of dividends resident in Hungary compatible with the provisions of the EU Treaties on the principle of freedom of establishment, the...