Brussels, 30 September 2010
The European Commission has today sent formal requests to Germany, Greece and Belgium to change their tax rules as it considers them to be discriminatory. The discriminatory regimes in question concern the inability of non-German companies to offset losses against profits within a group, Greek rules on withholding taxes on outbound dividends, Brussels region's beneficial tax regime on gifts and legacies granted to certain public bodies established in Brussels region (but not those established in other Member States) and Belgium's tax rules for capital gains on the redemption of shares of collective investment vehicles. These requests take the form of "reasoned opinions" (second stage of an infringement proceeding). In the absence of satisfactory responses within two months, the Commission may refer these Member States to the EU's Court of Justice.
Germany: fiscal unity (Organschaft)
Under German law, a company set up in accordance with the company law of another Member State, which has its registered office outside Germany and place of effective management in Germany, cannot benefit form the fiscal unity regime (Organschaft) which is available to German companies, although this company is fully taxable in Germany. Therefore the company cannot enjoy the tax benefits resulting from the allocation of the group company’s income to the parent company (offsetting of profits and losses within the fiscal unity). Such provisions are considered to be discriminatory in comparison to domestic competitors and may restrict the freedom of establishment of businesses in Germany. It should be underlined that this case does not deal with the question of crossborder loss compensation.
The Commission considers that Germany has failed to fulfil its obligations under Article 49 of the Treaty on the Functioning of the European Union (TFEU) and Article 31 of the EEA Agreement, i.e. the freedom of establishment.
Greece: withholding taxes on outbound dividends
Greece applies a withholding tax of 10% on dividends paid by Greek subsidiaries to Swiss parent.
The Commission considers that Greece does not respect its obligations under the "Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those of the Council Directive 2003/48/EC on taxation of savings income in the form of interest payments" ("Agreement"). According to this "Agreement", dividends paid by subsidiary companies to parent companies shall not be subject to taxation in the source State.
In this case the Commission acts to ensure that Greece respects EU law and in particular the "Agreement" between the European Community and the Swiss Confederation.
Belgium: Successions / donations
The Brussels region Codes on Registration duties and on Succession Duties establish a beneficial tax regime on gifts and legacies granted to certain public bodies established in Brussels region. Equivalent organisations in other Member States and EEA countries are excluded from this beneficial treatment. In the Commission's view, this constitutes a restriction of free movement of capital in breach of Article 63 of the TFEU and Article 40 of the EEA Agreement. The Commission does not see any possible justification for the restriction.
Belgium: capital gains on collective investment vehicles
In Belgium, capital gains on the redemption of shares of collective investment vehicles established in the EU but which do not qualify for the European passport according to Directive 85/611/EEC are not taxable. On the other hand capital gains on the redemption of shares of collective investment vehicles established in the EEA but outside the EU are taxable regardless of their status with respect to the European passport.
The Commission considers that this difference of treatment limits the free movement of capital guaranteed by Article 40 of the EEA Agreement and the freedom to provide services guaranteed by Article 36 of the EEA Agreement.
For the press releases issued on infringement proceedings in the area of taxation or customs see:
For the most up-to-date general information on the infringement proceedings initiated against Member States, see:
For more information on EU infringement procedures, see MEMO/10/457