(Conseil d’État, 10ème chambre jugeant seule, 02/05/2016, 375579, Inédit au recueil Lebon)
In the present case the Council of State (Conseil d’Etat) had to clarify the procedural rules governing tax recovery claims and to specify under which conditions a ruling of the European Court of Justice could serve as a legal basis for a tax recovery claim.
The company Axa claimed the reimbursement of the withholding tax on dividends paid to non-resident parent companies. The claimant company relied on Article L.190 of the Book on Tax Procedures which allowed taxpayers to lodge tax recovery claim based on rulings rendered by the Court of Justice of the EU revealing the incomparability of national tax with EU law. The Administrative Court of Paris (Tribunal administrative de Paris) granted the claim but later the Administrative Court of Appeal (Cour administrative d’appel) reversed the judgement.
The case was brought before the Council of State, which upheld the second instance court’s decision.
It found that the participation of the two beneficiary parent companies in the distributing company’s capital could not be regarded as an exercise of the freedom of establishment given that the two companies held respectively 16% and 6,5%. Therefore, the rulings of the Court of Justice of the EU C-251/98, C-170/05 and C-379/05, which concerned Article 43 of the EC Treaty, could not constitute a legal basis for the withholding tax recovery.
Moreover, the Council of State clarified that a ruling of the European Court of Justice concerning another Member State legislation could serve as a legal basis for a tax recovery claim only if the ruling revealed, by the interpretation that it gave to a EU Directive, that France had wrongfully transposed a Directive. In the present case, the claimant company invoked the ruling Amurta (case C-379/05) which concerned neither the French tax legislation, nor the transposition of an EU Directive. Consequently, the abovementioned ruling could not constitute a ground for a tax recovery.
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