TaxPersonal TaxECJ clamps down on shareholders’ rules

ECJ clamps down on shareholders' rules

European Court of Justice makes discriminatory national rules illegal

The ECJ has ruled illegal under European Union law discriminatory national
rules imposing more taxation on foreign European Union shareholders than is paid
by domestic shareholders.

Judges found for a French national Margaretha Bouanich, who received 917,000
euros from a Swedish public limited company, Förvaltnings AB Ratos, which had
decided to reduce its share capital. She launched legal action after the Swedish
local tax board, the Skatteverket, subsequently refused to refund tax charged on
her earnings from the repurchase.

Under Swedish regulations, non-resident shareholders cannot deduct the
initial cost of buying repurchased shares as an allowable business expense,
while those resident in Sweden can. The ruling is a legal precedent in all EU
member states, including Britain.

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