Press Release: Direct Taxation: Commission decides to refer Belgium, Spain, Italy, the Netherlands and Portugal to the Court over discriminatory taxation of outbound dividends and asks Latvia to end such discriminatory taxation

The European Commission decided to refer Belgium, Spain, Italy, the Netherlands and Portugal to the European Court of Justice for their rules under which certain dividend payments to foreign companies (outbound dividends) may be taxed more heavily than dividend payments to domestic companies (domestic dividends). The Commission considers that these rules are contrary to the EC Treaty and the EEA Agreement, as they restrict both the free movement of capital and the freedom of establishment. At the same time the Commission sent Latvia a formal request to amend its tax legislation concerning outbound dividend payments to companies. The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If Latvia does not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the European Court of Justice.