Köln-Aktienfonds Deka v Staatssecretaris van Financiën.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• ECLI: ECLI:EU:C:2020:51
• Docket Number: C-156/17
• Date: 30 January 2020

Provisional text

JUDGMENT OF THE COURT (Seventh Chamber)

30 January 2020 (*)

(Reference for a preliminary ruling — Free movement of capital and liberalisation of payments — Restrictions — Taxation of dividends received by undertakings for collective investment in transferable securities (UCITS) — Refund of tax withheld on dividends — Conditions — Objective differentiation criteria — Criteria which are by nature or in fact favourable to resident taxpayers)

In Case C‑156/17,

REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), made by decision of 3 March 2017, received at the Court on 27 March 2017, in the proceedings

Köln-Aktienfonds Deka

v

Staatssecretaris van Financiën,

interveners:

Nederlandse Orde van Belastingadviseurs,

Loyens en Loeff NV,

THE COURT (Seventh Chamber),

composed of P.G. Xuereb (Rapporteur), President of the Chamber, T. von Danwitz and C. Vajda, Judges,

Advocate General: G. Pitruzzella,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 22 May 2019,

after considering the observations submitted on behalf of:

– Köln-Aktienfonds Deka, by R. van der Jagt, acting as Partner,

– Nederlandse Orde van Belastingadviseurs, by F.R. Herreveld and J.J.A.M. Korving, acting as Agents,

– Loyens en Loeff NV, by A.C. Breuer, advocaat, and S. Daniëls, tax advisor,

– the Netherlands Government, by M.K. Bulterman and J. Langer, acting as Agents,

– the German Government, initially by T. Henze, J. Möller and R. Kanitz, and subsequently by J. Möller and R. Kanitz, acting as Agents,

– the European Commission, by W. Roels and N. Gossement, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 5 September 2019,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 63 TFEU.

2 The request has been made in proceedings between Köln-Aktienfonds Deka (‘KA Deka’) and the Staatssecretaris van Financiën (State Secretary for Finance, Netherlands) concerning the refund of dividend tax withheld from KA Deka in respect of share dividends from Netherlands companies received in the financial years 2002/2003 to 2007/2008.

Legal context

European Union law

3 The purpose of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ 1985 L 375, p. 3) was, according to its fourth recital, to establish common basic rules for the authorisation, supervision, structure and activities of undertakings for collective investment in transferable securities (UCITS) situated in the Member States and the information they must publish. Directive 85/611 was amended on a number of occasions before being repealed, with effect from 1 July 2011, by Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ 2009 L 302, p. 32), which recast the former directive.

Netherlands law

4 The Netherlands regime relating to fiscal investment enterprises (‘FIEs’) is intended to enable natural persons and, in particular, small investors to make collective investments in certain types of assets. The aim of that regime is to bring the tax treatment applicable to private individuals who invest through an FIE in line with the tax treatment of private individuals who make investments on an individual basis.

5 For that purpose, FIEs are subject to a zero corporation tax rate. They also benefit from the refund of dividend tax withheld on dividends received in the Netherlands. Thus, Article 10(2) of the Wet op de dividendbelasting 1965 (Law on the Taxation of Dividends of 1965), in its version applicable to the dispute in the main proceedings, states:

‘A company classified as an investment enterprise for the purposes of corporation tax may request the inspector to adopt a decision, open to appeal, granting it a refund of the dividend tax withheld from it during a calendar year …’

6 FIEs are also entitled to a concession in respect of tax deducted at source on their investment products abroad.

7 When they distribute dividends, FIEs are required to withhold Netherlands tax on the recipient’s dividends.

8 The FIE regime is mainly regulated by Article 28 of the Wet op de vennootschapsbelasting 1969 (Law on Corporation Tax of 1969), which lays down the conditions which must be met by an investment undertaking in order to qualify as an FIE.

9 One of those conditions is the obligation on the investment undertaking to distribute income to its shareholders or participants within a certain period of time. Thus, Article 28(2)(b) of the Law on Corporation Tax of 1969 provides that the part of the profit defined by an order of general application is to be paid to shareholders and holders of certificates of participation within 8 months of the end of the financial year and that the amount to be paid is to be divided equally between the shares and the certificates of participation.

10 In that regard, it is apparent from the file before the Court that, in accordance with the Besluit beleggingsinstellingen (Order on Collective Investment Enterprises) (Stb. 1970, No 190), as amended by the Order of 20 December 2007 (Stbl. 2007, No 573) (‘the Order on Collective Investment Enterprises’), non-deductible amounts are taken into account to determine the investment undertaking’s distributable proceeds. Furthermore, an FIE may establish a reinvestment reserve and a cash reserve to round off the sums it distributes. In addition, an FIE may establish a reinvestment reserve and a cash reserve to round off the sums it distributes.

11 The nature of the investment undertaking’s shareholders is also one of the conditions in order to qualify as an FIE, as the FIE regime is only to be used by the investors for whom it is intended.

12 In the years 2002 to 2006, the conditions relating to the shareholders were regulated by Article 28(2)(c) to (g) of the Law on Corporation Tax of 1969. Those provisions distinguished between investment undertakings whose shares or participations were held by the general public and others subject to stricter conditions. The distinction between those undertakings was based on whether or not their shares or certificates of participation were officially listed on the Amsterdam Stock Exchange.

13 An investment undertaking whose shares or participations were listed on the Amsterdam Stock Exchange was, in essence, excluded from the FIE regime if 45% or more of its shares or participations were held by an entity subject to a profit tax, with the exception of an FIE whose shares or participations are listed on the Amsterdam Stock Exchange, or were held by an entity subject to a profit tax in respect of its shareholders or participants. Moreover, an investment undertaking in which at least 25% of the shares or participations were held by a natural person alone could not qualify for the FIE regime.

14 An investment undertaking whose shares or participations were not listed on the Amsterdam Stock Exchange was subject to stricter conditions and had to, in order to qualify for the FIE regime, essentially have at least 75% of its shares or participations held by natural persons, by entities not subject to profit tax, such as pension funds and charitable organisations, or by other FIEs. An investment undertaking could not benefit from the FIE regime if one or more natural persons held a participation of at least 5% of the shares or participations in that undertaking. If the investment fund held an authorisation under the Wet houdende bepalingen inzake het toezicht op beleggingsinstellingen (Law on the supervision of investment funds) of 27 June 1990 (Stb. 1990, No 380), that prohibition was replaced by the rule that no natural person is entitled to hold 25% or more of the shares in the undertaking.

15 Following legislative amendments, since 1 January 2007, in order to benefit from the FIE regime, the shares or participations of an investment undertaking must be admitted to trading on a market in financial instruments, such as that referred to in Article 1:1 of the Wet houdende regels met betrekking tot de financiële markten en het toezicht daarop (Law on financial markets and their supervision) of 28 September 2006 (Stb. 2006, No 475), or the fund or the fund manager must hold an authorisation under Article 2:65 of that law or be exempt from holding it under Article 2:66(3) of that law.

The dispute in the main proceedings and the questions referred for a preliminary ruling

16 KA Deka is an investment fund constituted under German law (Publikums- Sondervermögen) established in Germany. It is a UCITS within the meaning of Directives 85/611 and 2009/65, open-ended, listed on the stock exchange, without legal personality and exempt from tax on profits in Germany. It makes investments on behalf of individuals. Its share price is listed on the German Stock Exchange, but the shares are traded via the ‘global stream system’.

17 During the financial years 2002/2003 to 2007/2008, KA Deka received dividends distributed by companies established in the Netherlands, in which it held shares. Those dividends were subject, in accordance with the Convention for the avoidance of double taxation in the area of income, capital, and various other taxes and for regulating other tax matters, concluded on 16 June 1959 between the Kingdom of the Netherlands and the Federal Republic of Germany (Trb. 1959, 85), as amended by the third additional protocol of 4 June 2004 (Trb. 2004, 185) (‘the tax convention between the Kingdom of the Netherlands and the Federal Republic of Germany), to a tax of 15% which was withheld at source. KA...