The European Commission has called on Austria and Germany to amend national legislation on outbound dividend payments to companies. Both member states tax dividends paid to foreign companies more heavily than dividends paid to domestic companies.
The request takes the form of a reasoned opinion (second step of the infringement procedure under the EC Treaty). If the relevant national legislation is not changed, the Commission may decide to refer the matter to the European Court of Justice.
The Commission has also sent requests for information in the form of letters of formal notice (first step of the infringement procedure) to Italy and Finland about their rules under which dividends paid to foreign pension funds may be taxed more heavily than dividends paid to domestic pension funds. Italy and Finland must reply within two months.
"The Member States cannot tax dividends paid to shareholders resident elsewhere in the EU more heavily than dividends paid to shareholders resident in their own Member State" said EU Taxation and Customs Commissioner László Kovács. "Such discrimination is contrary to the EC Treaty, as confirmed by the Court of Justice in its judgement on Denkavit of December 14 2006."
