• Professional News
  • 16 November 2011

German withholding tax ruled to be EU unconstitutional

According to a European Court of Justice ruling, the German withholding tax rules applicable to dividend to foreign companies etc. are EU unconstitutional. The ruling implies that Danish companies which are portfolio shareholders (i.e. holding less than 10% of the shares) may receive a refund of any German withholding tax levied.

We therefore recommend Danish companies which are portfolio shareholders in German companies to submit a request for a refund of German withholding tax as soon as possible. If required, Bech-Bruun Tax may offer assistance through our German business partners.

Danish companies holding 10% or more of the shares may also benefit from the ruling passed. They may have paid German withholding tax in situations not deemed to be covered by EU’s parent/subsidiary directive by German legislators.

The possibility of repayment of German withholding tax is expected to apply to dividend received in 2007 or later.

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