The European Court of
Justice has restricted the use of temporal limitation powers as it
ruled for the taxpayer in the Meilicke case on tax credits on dividends.
The case challenged German rules granting tax credits to individuals
receiving German sourced dividends, but not on overseas source dividends. The
ECJ held that this was contrary to the free movement of capital, confirming a
similar case in Finland known as the Manninen case.
Jonathan Bridges from KPMG
welcomed the decision, but said a far more important consequence of the
ruling was the fact that the ECJ introduced no temporal limitation on its
Temporal limitation is a power the ECJ has to restrict the scope of its
judgments to limited categories of taxpayers if it fears that the financial
exposure of a member state to a decision will be too great.
Temporal limitation was a key factor of the Meilicke case, which required two
advocate general opinions in order to address the question of temporal
The ECJ decision on Meilicke introduced no such limitation, opening the door
for other tax cases to enjoy similar benefits.
‘The temporal limitation issue is one that could benefit other tax cases at
the ECJ,’ said Meilicke. ‘In the Meilicke case the use of temporal limitation
was not introduced, which could restrict its use in the future.’
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