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3 March 2017
EU Direct Tax Newsalert
Dutch Supreme Court refers preliminary
questions on Dutch dividend withholding
tax to the CJEU
On 3 March 2017, the Dutch Supreme Court referred questions for a preliminary ruling to the
European Court of Justice (“CJEU”) relating to
the alleged discriminatory withholding tax levied on foreign investment funds.
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Background
The Dutch Supreme Court has ruled in several
cases that a foreign investment fund is not entitled to a refund of Dutch dividend withholding tax (“WHT”). For instance, in a judgment
dated 10 July 2015, it ruled that a Luxembourg
SICAV is not objectively comparable to a fiscal
investment institution (“FBI”), which is effectively entitled to a refund of Dutch WHT. In this
case, the Dutch Supreme Court considered only
the position of non-Dutch investors in a foreign
investment fund and did not refer preliminary
questions to the CJEU.
Danish case has already been referred to the
CJEU (C-480/16, Fidelity Funds), which appears to be comparable to the case at hand, the
Dutch Supreme Court was of the view that it is
not beyond reasonable doubt that its judgment
of 15 July 2015 is correct. Therefore, the Dutch
Supreme Court decided to refer preliminary
questions to the CJEU.
Preliminary questions in its judgments
In its judgments, the Dutch Supreme Court
raised questions including the following:
1.
Despite this judgment, many foreign investment funds initiated judicial proceedings to ob- 2.
tain a refund of Dutch WHT.
On 1 August 2016, a Dutch District Court referred questions for a preliminary ruling to the
Dutch Supreme Court in two of these cases relating to a UK and German investment fund.
Given the apparent legal uncertainties, the
Dutch Advocate-General suggested that the
Dutch Supreme Court refer questions for a pre- 3.
liminary ruling to the CJEU.
Introductory remarks of the Dutch Supreme Court
The Dutch Supreme Court considered that its
judgment of 10 July 2015 gave rise to widespread criticism in the Netherlands. The Supreme Court recognised that this criticism relates specifically to the question whether the
Supreme Court in 2015 formulated a correct
criterion to assess whether a foreign investment fund is objectively comparable to an FBI.
The underlying uncertainty emanates from the
argumentation of the Dutch Supreme Court in
its judgment of 10 July 2015 which is partly
based on the CJEU Judgment in Miljoen.
Is it contrary to EU law that the Netherlands
does not grant a refund of Dutch WHT to
foreign investment funds, which are not
obliged to withhold WHT while such refund
is provided to a Dutch investment fund
which annually distributes its profits and
withholds Dutch WHT on such distribution?
Is it contrary to EU law that the Netherlands
does not grant a refund of Dutch WHT to
foreign investment funds, which do not
demonstrate that the shareholder and redistribution requirements are met, while such
refund is granted to a Dutch investment
fund which annually distributes its profits
and withholds Dutch WHT on such distribution?
Is it contrary to EU law that the refund of
Dutch WHT is refused to foreign investment
funds and not to Dutch investment funds as
a result of which foreign investment funds
are placed at a disadvantageous position to
attract Dutch investors or investors established in the Netherlands?
PwC Comment
We consider it logical that the Dutch Supreme
Court referred preliminary questions to the
CJEU given the apparent legal uncertainties.
Until the questions are answered, we recommend foreign investment funds preserve their
rights by either objecting/appealing possible
negative decisions of the Dutch tax authorities or
the Dutch lower courts. Furthermore, we recommend foreign investment funds safeguard their
The Dutch Supreme Court considered that in rights for years for which a refund request has
view of prior CJEU case-law, the comparability not yet been filed.
analysis of the Supreme Court was correct. Furthermore, it considered that it cannot be derived from Miljoen that its comparability analysis was incorrect. This can also be derived
from the recent CJEU Judgment in Pensioenfonds Metaal en Techniek. However, since a
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