CJEU - Recent Developments in Direct Taxation 2024

1. Introduction

In the cases C-92/24, C-93/24 and C-94/24 (Banca Mediolanum), the Court of Justice of the European Union (CJEU) is called to review the compatibility of Art. 6(1)(a) of Legislative Decree No. 446 of 15 December 1997 (Decree 446/97) with Art. 4 of Directive 2011/96/EU of 30 November 2011 (the Parent-Subsidiary Directive, or the Directive).

The question referred to the CJEU by the second-tier tax court of Lombardy is whether the 50% inclusion of the dividends in the Regional trade tax (IRAP) taxable base set forth in Art. 6(1)(a) of Decree 446/97 is allowed considering the “prohibition on subjecting profits received by parent companies resident in one Member State from subsidiaries resident in other Member States to taxation at a percentage rate exceeding 5 per cent of the amount referred to in Article 4” of the Parent-Subsidiary Directive.

2. Legislative Framework

Under Art. 4 of the Parent-Subsidiary Directive, Member States of qualifying parent companies may decide to eliminate double taxation on dividends distributed by qualifying EU subsidiaries through either the exemption method or the impuS. 12tation system. Member States can also disallow the deduction of costs connec...