Exciting ECJ referral by the Federal Fiscal Court – capital gains tax in the context of third countries under scrutiny

The Federal Fiscal Court (BFH) has referred a landmark question to the European Court of Justice (ECJ): Is Germany permitted to levy capital gains tax on dividends paid to companies in third countries, while EU/EEA parent companies can offset or reclaim this tax?

The case directly affects international corporations and could trigger significant refund claims. Key points of the referral:

• Whether the free movement of capital is fundamentally applicable or superseded by the freedom of establishment,
• Whether Germany is imposing a restriction that is contrary to EU law,
• Whether such a restriction can be justified, if applicable,
• And whether the refund may be made dependent on additional evidence.

Cindy Slominska provides a summary of the explanations and the BFH's opinion on the legal issues, as well as further comments, in her Steuerboard article.