National tax laws within the European Union which levy the same money from
dividends earned from local companies as from those in other EU member states
are fair, the European Court of Justice advocate general has decided after
considering a Belgian case.
Leendert Geelhoed has formally advised that relevant EU treaty rules on
discrimination allow national laws, as in Belgium, that ‘subjects dividends from
resident companies and dividends from companies resident in another member state
to the same uniform tax rate’.
This is regardless of whether tax bills consider the rate of ‘tax levied at
source at that other member state’. In this case, a Belgian couple were
protesting that a 25% Belgium tax rate had been applied to dividends earned from
a French company, even though their earnings had previously been reduced by 15%
via withholding tax in France. Geelhoed said, in any case, double taxation
agreements between France and Belgium would provide adequate refunds.
The advocate general also said that British laws on taxation of dividends
from company subsidiaries were unfair.
The European Court of Justice will now consider whether to follow his advice
in both cases.
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