Case C-386/14 Groupe Steria concerned French legislation which provided for the differential taxation of dividends received by parent companies of a tax-integrated group, depending on where their subsidiaries were established. Where dividends came from companies belonging to a tax-integrated group, any costs and expenses could be deducted from the profits, so that the dividends were not subject to tax. However it was only possible for French-established companies to belong to such a group. Therefore parent companies receiving dividends from subsidiaries established in other Member States would not be able to benefit from the deduction mechanism, and would be subject to 5% tax. The Applicant was a parent company with holdings in subsidiaries established in France and other Member States.
The Court found that the French legislation disadvantaged parent companies with subsidiaries established in other Member States and, consequently, was liable to make it less attractive for those companies to set up subsidiaries in other Member States. There was no overriding reason in the general interest which justified such treatment. The legislation therefore breached Art 49 TFEU. This case is interesting for the Court’s detailed analysis of recent case law in this area concerning the interpretation of what may constitute an overriding reason in the general interest. The Court’s reasoning was also partly based upon settled case-law, including C-446/04 Test Claimants in the FII Group Litigation, for the proposition that Member States may only exercise decisions in relation to the preventing or mitigating the imposition of charges to tax or economic double taxation in compliance with the fundamental provisions of the TFEU.
This article appears in the JHA September 2015 Tax Newsletter, which also features:
You can download the complete newsletter as a PDF here: September 2015 – Tax Newsletter
