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Publishers Abstract:
This article examines the European Court of Justice's recent decisions regarding cross-border dividends from the perspective of tax policy. The ECJ has no explicit charge to make income tax policy, which is generally left to the Member States by the European treaties. Indeed, EU income tax legislation continues to require the unanimous consent of all Member States. The Court's dividend jurisprudence fails to hold together substantively, functionally and rhetorically. Substantively, there is no basis in the EC Treaty for choosing source over residence taxation. Functionally similar tax provisions, such as withholding and imputation, are treated differently, due to the Court's insistence of a formalistic distinction between taxes on corporations and shareholders. Rhetorically, the categories used by the ECJ are so malleable that they provide very little predictive power as to how future cases will be decided.
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