Taxation rules applying to subsidiaries and parent companies based in
different European Union member states must be the same as those that apply for
subsidiaries and parents in the same country, the European Court of Justice has
ruled in two cases. Both involve German tax law, but as usual the decisions will
set precedents across the EU.
Firstly, the court has ruled countries that allow the tax-free payment of
dividends from a subsidiary to a parent company must allow this tax break where
a subsidiary is based in another EU member state. This case involved tax claims
against a German company Keller Holding GmbH, which had received dividends from
a subsidiary in Austria and wanted them tax free, as for a German subsidiary.
Secondly, the court has ruled that EU treaty rules ban national tax laws
levying higher taxes on a local subsidiary owned by a parent in a foreign EU
member state. The ECJ said national courts should order taxes applying if the
parent company had been in the same country as the subsidiary. This case
involved Luxembourg parent company CLT-UFA.
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