CJEU - Recent Developments in Direct Taxation 2025

1. Volvo Group Belgium SA (C-436/23)

1.1. Introduction

On 12 December 2024, the CJEU issued its judgement in Volvo Group Belgium SA (C-436/23). This case concerned the consequences of the annulment of the Belgian fairness tax, a special levy targeting loss-making, dividend-distributing companies. Specifically, the CJEU examined whether Belgium could maintain the effects of the annulled fairness tax for previous tax years for Belgian subsidiaries of non-resident companies, while permanent establishments (PEs) of those same non-resident companies were no longer subject to it.

The CJEU held that this difference in treatment does not infringe the freedom of establishment under Article 49 TFEU because, after the annulment of the fairness tax, subsidiaries and PEs of non-resident companies were no longer in a comparable situation.

1.2. Background on the Belgian “Fairness Tax”

Belgium introduced the fairness tax in 2013 as a separate corporate income tax levy of 5.15%. It targeted dividend distributions that had not been taxed under the ordinary Belgian corporate tax rules due to the use of tax deductions (e.g. notional interest deduction or carried-forward losses).

This tax was challenged almo...