The Reimbursement of Withholding Tax on Dividends Distribution of Non-Resident Minority Stakeholders of Italian Companies: an EU Judgment
By Bernadette Accili
On November 19, 2009, the EC Court of Justice issued judgment C-540/07 in the case European Commission v. Republic of Italy on the tax treatment of dividends distributed by Italian companies to non-resident companies located in the EU or in the EEA.
According to the EC Court of Justice, the Republic of Italy has failed to fulfill its obligations under article 56 of the Treaty as well as to Articles 56 and 40 of the EEA by making dividends distributed to companies established in other Member States subject to a less favorable tax regime than that applied to dividends distributed to resident companies.
Following this judgment, companies resident in the EU or in the EEA which have received dividends from an Italian subsidiary where they held less than 20% can request the refund for the withholding tax paid in Italy.