Newsletter - A decision of the Spanish Supreme Court confirms EU incompatibility of taxation of dividends to non-Italian Collective Investment Vehicles

In its Decision No. 1581 of 13 November 2019, the Spanish Supreme Court held that the Spanish tax system infringes the EU free movement of capital insofar as it provides for taxation of dividends paid to a US Regulated Investment Company (“RIC”) at a 15% rate, while dividends paid to Spanish Collective Investment Vehicles (“CIVs”) are taxed at a 1% rate. 

This Decision applies the principles set out by the Court of Justice of the European Union (“CJEU”) in a solid line of cases, within which it has been consistently held that withholdings taxes (“WHTs”) on outbound dividends are discriminatory to the extent that a national comparable shareholder is either exempt or taxed at a lower rate.

See an analysis on the topic by our Tax Department