CJEU - Recent Developments in Direct Taxation 2025

1. Introduction

On 27 February 2025, the Court of Justice of the European Union (CJEU) delivered its judgement in F S.A. v. Dyrektor Krajowej Informacji Skarbowej (Case C-18/23), a landmark decision concerning the Polish corporate income tax (CIT) exemption for investment funds. The case addressed a Polish provision that granted a CIT exemption only to funds managed by an external authorized management company, a condition automatically fulfilled by all domestic funds but often not by foreign funds structured as self-managed investment companies. The question before the Court S. 208was whether such a structural requirement was compatible with EU law, in particular with the free movement of capital under Article 63 of the Treaty on the Functioning of the European Union (TFEU). Under Article 63(1) TFEU, all restrictions on capital movements and payments between Member States, as well as between Member States and third countries, are prohibited. Cross-border investments by collective investment vehicles, such as the acquisition of securities or other financial assets, clearly fall within the scope of that provision. The case therefore raises the question of how far Member States may design t...