CJEU cases on beneficial ownership and treaty abuse – case overview

On February 26, 2019, the Court of Justice of the European Union (CJEU) issued its landmark judgements in six cases which deal with the application of the EC Parent-Subsidiary Directive and the EC Interest and Royalty Directive. The majority (5 out of 6) of the cases involved Luxembourg or Cyprus holding and financing companies. Effectively the Luxembourg and Cyprus holding companies formed part of a pooled investment group collecting funds from generally non-EU investors.

24 May. '19 Patrick T.F. Schrievers


The cases (two joint dividend cases C-116/16 & C-117/16 and four joint interest cases C-115/16, C-118/16, C-119/16 & C-299/16) revolve around Danish operational companies owned by a parent company in another EU Member State (Luxembourg, Cyprus and Sweden). Subsequently, these EU parent companies were all owned by companies resident outside the EU. In respect of the dividend and interest payments, the Danish companies claimed exemptions of withholding tax based on the EC Parent-Subsidiary Directive and/or the EC Interest and Royalty Directive.

The claim was challenged (or the request was denied) by the Danish Tax Authorities (DTA), stating that the recipients in the EU were not the beneficial owners of the interest or dividend payments. The case ended up in the Danish High Court, which then referred questions to the CJEU. The CJEU ultimately agreed with the DTA. The CJEU clarified in this respect that it was not its duty to assess the facts in the main proceedings. However, when giving a preliminary ruling, the CJEU may, if appropriate, specify indicia in order to guide the national court in the assessment of the cases that it has to decide.

Patrick T.F. Schrievers

Patrick T.F. Schrievers is a tax lawyer and member of the Dutch Association of Tax Advisers (NOB) and the International Fiscal Association (IFA).

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