Press Release: Direct Taxation: Commission requests Belgium, Spain, Italy, Luxembourg, the Netherlands and Portugal to end discriminatory taxation of outbound dividends

The European Commission has sent Belgium, Spain, Italy, Luxembourg, the Netherlands and Portugal a formal request to amend their tax legislation concerning outbound dividend payments to companies. These six Member States tax dividend payments to foreign companies more heavily than dividend payments to domestic ones. 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. The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If the Member States do not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the European Court of Justice.