WHT reclaim – CJEU Case C-545/19 (“AEVN”) – Update

Please allow us to highlight the recent – important and interesting – opinion of European Court of Justice’s Advocate General Kokott in the proceedings C-545/19 - “AEVN”, dated 6 May 2021.¹

The subject matter of the proceedings is the application of the German investment fund AEVN, a regulated AIF, for reimbursement of WHT suffered on Portuguese dividends in 2015 and 2016.

The questions referred to the CJEU address whether a non-resident investment fund is discriminated against in violation of the free movement of capital, because the WHT suffered on Portuguese dividends would not be triggered, if said dividends were paid to a Portuguese investment fund.

The case affects not only a large number of investment funds holding Portuguese common stock, but – as the WHT reclaim in the case is based on the argument of discriminatory treatment according to EU law – has significance far beyond the specific fact pattern of the single case.

In a nutshell: the opinion dated 6 May 2021 attempts a general roll-back of the well-established WHT related jurisprudence of the CJEU. The opinion, in our view, does not present a convincing methodological concept which serves as the best deterrent against arbitrary discrimination and disguised restriction by means of national tax law (Art. 65 para. 3 TFEU).

It seems that the time is right for action by the EU Commission and to counter the still existing discriminatory treatment of investment funds in multiple jurisdictions in the EU, not by constantly seeing new cases being presented to the CJEU, but rather by an EU initiative regarding a harmonized WHT scheme applicable to investment funds, comparable to the VAT regime.²

We will separately comment on the interesting CJEU case in more detail.

¹ See also WTS Global Info Letter #19 of 4 January 2021.

² See Action 10 of the new Action Plan for a Capital Markets Union for people and businesses dated 24 September 2020 (COM(2020) 590 final).
 

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