The Netherlands I: Köln-Aktienfonds Deka (C-156/17): Refund of dividend withholding tax for a foreign investment fund

In this contribution, the author discusses a case concerning the Dutch dividend withholding tax. Dividend withholding taxes have been assessed for their consistency with EU law in cases referred from several Member States. As a result, a large body of case law has been developed on dividend withholding taxes (DWHT). Nevertheless, on many issues, a lack of clarity or inconsistency between the DWHT and EU law is still present. The case discussed in this chapter exhibits a number of still existing open questions, at least according to the Dutch Supreme Court.
This case deals with a claim for refund of Dutch DWHT by a non-resident portfolio shareholder, more precisely, a German resident investment fund, which was refused by the tax authorities. The case focuses on the question of whether the situation of this investment fund is comparable with a Netherlands resident fiscal investment institution (FII) which would have been entitled to a refund of Dutch DWHT.
In the context of the fact that under domestic Dutch tax law, the taxpayer in this case is not entitled to a DWHT refund, the author firstly present the facts of the case, the relevant domestic tax laws and DTC law, the main considerations of the Dutch Supreme Court, and the preliminary questions that have been referred to the CJEU. Secondly, the author comments on the issues raised. In this respect, the following issues are discussed:
1. Whether the Dutch Supreme Court can uphold its decision in HR BNB 2015/203 that a foreign investment fund is not comparable with a Netherlands resident FII because a foreign investment fund is not a dividend withholding agent in the Netherlands?
2. Whether on the basis of the Miljoen case, the effective Dutch tax position of participants in a foreign investment fund is comparable with that of participants in a domestic FII and the foreign investment fund therefore has a legal basis for a DWHT refund claim?
3. Whether the PMT case is a confirmation of HR BNB 2015/203?
4. Whether the specific shareholder conditions of the FII regime prevent a comparison of a foreign investment fund with a domestic FII?
5. Whether the redistribution condition of the FII regime prevents a comparison of a foreign investment fund with a domestic FII?
These comments are not made in isolation, rather they are based on benchmarks. The contribution is closed by summarizing the author’s main conclusions.