European Court of Justice Issues Preliminary Ruling on French Dividend Tax Rules

The European Court of Justice (ECJ) May 12 issued a preliminary ruling for Case No. C-556/20, clarifying the French dividend tax rules. Two French companies noted the difference in the treatment of dividends in cross-border situations when one company was a parent company. Under French regulations, no tax credit was granted to the parent company for taxes withheld when dividends and profits from nonresident subsidiaries were redistributed to shareholders. The ECJ held the EU parent-subsidiary rules are opposed to national legislation making a parent company liable for withholding tax, when redistributing profits paid by its subsidiaries to shareholders, when: 1) ...