The dispute concerns the refund of tax paid in France by companies with subsidiaries in other countries of the European Union (under the ‘advance payment of tax' mechanism). Although the Council of State had referred questions for preliminary ruling to the Court, it then adopted a restrictive interpretation of the CJEU judgment in two judgments handed down in December 2012. The Commission takes the view that those judgments are incompatible with EU law.
The Commission has referred France to the Court of Justice of the European Union for failure to act by maintaining discrimination in the taxation of dividends originating in other Member States of the European Union.
The Commission takes the view that France is not complying with the Court's judgment of 15 September 2011 on three specific points:
- it does not take into account the tax already paid by non-French subsidiaries;
- it limits the system of tax credits to one third of the dividend redistributed by a non‑French subsidiary. This limit constitutes a difference in treatment between companies receiving dividends originating in other Member States and those receiving dividends of French origin. The Commission considers that to be contrary to the right of establishment and to the free movement of capital;
- in order to restrict the right of the companies concerned to a refund, it maintains requirements concerning the evidence to be provided, so does not comply with the criteria laid down by the Court of Justice in the above judgment.
The Commission sent France a letter of formal notice on 27 November 2014, followed by a reasoned opinion on 29 April 2016. Since France has not yet complied, the Commission is now bringing the matter before the Court of Justice of the European Union.
For more information
— On key decisions in the December 2016 infringement package, see MEMO/16/4211.
— On the general infringement procedure, see MEMO/12/12.
— On infringement procedures.