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Home News & Events TAX NEWS: Reclaim of EU Withholding Taxes on Dividends and Interests for Non-EU Portfolio Investors

TAX NEWS: Reclaim of EU Withholding Taxes on Dividends and Interests for Non-EU Portfolio Investors

Sunday, 20 March 2011 22:09

The European Court of Justice (ECJ) has through its many judgments, established the principle that the payment of dividends and interests is deemed to be a movement of capital as contemplated under Article 56 of the EC Treaty which states that "all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited."

It is to be emphasized that the relative principle has been interpreted as not being limited to the withholding taxes on dividends and interests raised intra-EU States but is also applicable to non-EU countries where investors would be based.

In this respect and on the basis of Article 56 as aforementioned, in recent years, the EU Commission has experienced a number of complaints raised by portfolio investors from non-EU countries claiming a refund of the payments so made as withholding tax on divdends and interests.  Claims for a refund of the witholding tax have already been filed with the competent tax authorities of a number of Member States including Austria, Poland and The Netherlands.