Certain aspects of the Dutch withholding tax regime are
violating EU law, concluded the Dutch court of appeal of 's
Hertogenbosch. The case in question was an appeal of a Finnish
investment fund that was unable to get a refund of withholding
taxes that, according to the EU Treaty of Functioning of the
European Union article 63 on the free movement of capital, the
investment fund should not need to pay.
The defense asserted that their case was comparable to native Dutch
tax exempt legal entities that are entitled to a refund of
withholding tax. Being a foreign entity, the Finnish fund could not
obtain such refund. This discrimination was seen as a violation on
the free movement of capital.
Initially losing in the lower court, the fund was proven right in
the court of appeal, although the case is likely to go further up.
The Dutch ministry of finance will pursue an appeal with the
Supreme Court, and if that proves unsatisfying, probably ask for a
ruling from the European Court of Justice.
Should the Finnish investment fund prevail, it could see thousands
of similar funds from Luxembourg, Liechtenstein, Austria and other
EU member states claim refunds to a total value of approximately 1
billion Euro. The stakes are high in a case that we will follow
with great interest.
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