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Keep Your Hands Off Tax Treaties – a Comment on the ECJ Decision in the Case C-374/04, Test Claimants in Class IV of the ACT Group Litigation
Hände weg von DBA – eine Anmerkung zur EuGH-Entscheidung in der Rs. C-374/04, Test Claimants in Class IV of the ACT Group Litigation
Am entschied der EuGH in der Rs. C-374/04, Test Claimants in Class IV of the ACT Group Litigation. Er urteilte, dass das alte britische Besteuerungssystem von Dividenden sowie die in DBA enthaltenen „Limitation-on-benefit“-Klauseln nicht EG-rechtswidrig sind. Lukasz Adamczyk analysiert die Entscheidung und ihre Konsequenzen.
Introduction
On December 12, 2006, the European Court of Justice decided the case C-374/04, Test Claimants in Class IV of the ACT Group Litigation (hereinafter: the ACT GL case), and declared the previous UK system of taxation of outbound dividends compatible with European fundamental freedoms. More specifically, the Court found that denying a tax credit to non-resident shareholders – where resident shareholders were entitled to it – does not constitute an infringement of EC law. Furthermore, the Court confirmed that the EC Treaty does not require the judicial application of the MFN principle in tax treaties concluded by Member States, and unexpectedly held that limitation-on-benefits clauses do not violate EC law.
Legal Background
Under UK law existing before May 6, 1999, UK companies distributing dividends were obliged to pay Advance Corporation Tax (ACT). ACT d...