European Tax Law Center - Newsflash #2

On 30 January 2020, the European Court of Justice (“ECJ”) issued its judgement in the case of the German investment fund Köln Aktienfonds Deka (“KA Deka”).

KA Deka had filed a refund request for Dutch dividend withholding tax withheld on dividend that it had received from its Dutch (portfolio) investments, arguing that a Dutch fund qualifying as a so-called “fiscal investment fund” (fiscale beleggingsinstelling, “FBI”) was allowed to receive such refund under Dutch law (as applicable until 2007).

The ECJ had to address two preliminary questions from the Dutch Supreme Court on the compatibility of the Dutch dividend withholding tax regime with EU law in the treatment of a non-resident UCIT in comparison to a Dutch resident UCIT qualifying as a FBI.

In order to qualify as an FBI, an UCIT has to meet the following two conditions:

• The shareholders or participants must meet certain requirements, generally related to the percentage of investment (the “shareholder requirements”).
• The UCIT must distribute all proceeds eligible for distribution within 8 months after the relevant financial year to its shareholders/participants (the “redistribution requirement”).
   

The full ETLC document can be viewed here.