Judgment of the Court (Grand Chamber) of 12 December 2006 (reference for a preliminary ruling from the High Court of Justice of England and Wales, Chancery Division, United Kingdom) - Test Claimants in Class IV of the ACT Group Litigation v Commissioners of Inland Revenue
(Freedom of establishment - Free movement of capital - Corporation tax - Payment of dividends - Tax credit - Separate treatment of resident and non-resident shareholders - Bilateral double taxation conventions)
Language of the case: English
Referring court
High Court of Justice of England and Wales, Chancery Division
Parties to the main proceedings
Applicants: Test Claimants in Class IV of the ACT Group Litigation
Defendant: Commissioners of Inland Revenue
Re:
Reference for a preliminary ruling - High Court of Justice of England and Wales, Chancery Division - National legislation on corporation tax - Retention at source ("advance corporation tax") applied to the profits distributed by a subsidiary to a parent company - Tax credit designed to take account of a retention made upstream - Benefit of the tax credit limited to residents and to residents of certain other Member States party to a convention for avoiding double taxation containing a clause to that effect - Liability of a Member State for breach of Community law - Form of redress
Operative part of the judgment
1. Articles 43 EC and 56 EC do not prevent a Member State, on a distribution of dividends by a company resident in that State, from granting companies receiving those dividends which are also resident in that State a tax credit equal to the fraction of the corporation tax paid on the distributed profits by the company making the distribution, when it does not grant such a tax credit to companies receiving such dividends which are resident in another Member State and are not subject to tax on dividends in the first State;
2. Articles 43 EC and 56 EC do not preclude a situation in which a Member State does not extend the entitlement to a tax credit provided for in a double taxation convention concluded with another Member State for companies resident in the second State which receive dividends from a company resident in the first State to companies resident in a third Member State with which it has concluded a double taxation convention which does not provide for such an entitlement for companies resident in that third State.
____________1 - OJ C 273, 6.11.2004.