Pension Funds, Taxation and the Free Movement of Capital of the EU

A recent article analyzes foreign pension fund taxation under EU free movement of capital rules, covering WHT on dividends and insights from both EU/EEA and third-country perspectives.

The CJEU judgement of 19 December 2024 has important implications for foreign companies investing in Spain that incur losses in their country of residence and that cannot recover the WHT on the income derived from their investments in Spain.

CJEU's February 2025 ruling may reshape Polish WHT exemption rules for foreign investment funds—key implications for internally managed structures.

This article delves into the evolving Polish WHT regulations on passive income, examining recent rulings on exemptions for dividends, interest, and royalties, impacting international industry groups.

In November 2024, a new decision from the Norwegian Tax Appeals Board (SKNS1-2024-97) was published regarding the refund of withholding tax for a RIC resident in the US. The decision implies that more shareholders may be entitled to a refund of withholding tax.

This article covers key insights on new rules for taxation of crypto-assets and changes to the taxation of employee shares in the Czech Republic.

On 7 November 2024, the European Court of Justice (CJEU) issued a judgment (XX, C-782/22) regarding the levy of dividend withholding tax (DWT) on foreign insurance companies in light of the European free movement of capital.

In December 2024, the first foreign investment fund received a tax refund under EU law, following a key German court ruling. However, securing timely WHT refunds requires applicants to navigate complex procedural, operational, and documentation challenges.

The European Court of Justice decided on November 7, 2024, that the levying of withholding taxes on dividends received by foreign insurance companies on their investments relating to unit-linked insurance policies can violate EU law.

The CJEU ruled that Sweden’s tax system is discriminatory and violates EU law, as it denies tax refunds on dividends to foreign public pension funds while exempting Swedish ones, following a challenge by Finnish pension funds

The German Federal Fiscal Court (BFH) recently published two important decisions according to which foreign securities investment funds were discriminated against compared to German investment funds.

The EU Commission recently decided to initiate infringement proceedings against the Netherlands (INFR 2024/4017 of 25 July 2024).

On 29 July 2024, the European Court of Justice (“CJEU”) issued a new judgement (“KEVA”, C-39/23) that concerns public pension funds, WHT and the EU fundamental freedom of capital movement.

On 25 July 2024, the European Commission published its decision to initiate an infringement procedure, which may force the Netherlands to reconsider their discriminatory taxation practice regarding the taxation of foreign investment funds which has been in place for years.

On 21 March 2024, Attorney General (GA) Collins of the Court of Justice of the European Union (CJEU) issued his legal opinion in the CJEU case "KEVA" (Case C‑39/23). The GA opines in favour of the applicants, three Finnish pension institutions.

The German Federal Fiscal Court's (BFH) recently published its ruling on the “L-Fund case” dated 11 October 2023, following the European Court of Justice judgement of 27 April 2023 (C‑537/20).

It may be of interest to foreign asset managers and custodian banks that the German government recently presented a plan to stabilize the statutory pension system.

In its decision of 23.3.2023, the Austrian Supreme Administrative Court declined the qualification of a Cyprus-based intermediary holding company for a refund of Austrian withholding taxes on dividend payments under the EU Parent Subsidiary Directive.

On 19 December 2023, the Supreme Administrative Court handed down its judgment in case number II FSK 2108/20 concerning interest on overpaid WHT for foreign investment funds.

In its decision of 20 April 2023, the Cologne Fiscal Court awards a Belgian insurance company a refund of German WHT suffered on German portfolio dividends in 2009 under the free movement of capital of European law.

The French tax administration tried to increase the scope of French withholding tax by increasing the beneficial ownership requirements in cases where French banks acquire shares temporally from foreign shareholders.

In September 2023, the Austrian Supreme Administrative Court filed a preliminary ruling request with the European Court of Justice concerning the Austrian investment funds legislation.

In April 2020, a first proposal for a new Swedish Withholding Tax Act was referred for consultation by the Swedish Ministry of Finance.

The issue of mandatory beneficial owner testing in the application of WHT exemptions on dividend payments has been a bone of contention generating disputes with Polish tax authorities since 2019.

In its decision of 23.3.2023 the Austrian Supreme Administrative Court declined the qualification of a Cyprus-based intermediary holding company for a refund of Austrian withholding taxes on dividend payments under the EU Parent Subsidiary Directive.

1 March 2023 saw the amended protocol to the double taxation agreement between the United Arab Emirates and Austria enter into force. Whilst the protocol has various implications for residents of Austria, the changes regarding withholding tax on dividends mainly affect residents of the UAE.

In a recent case, the Austrian Fiscal Court had to decide whether withholding taxes that cannot be fully credited in the respective tax year can be carried forward to the following years.

On November 15, 2022 the Austrian Ministry of Finance (MoF) published an information letter on the attribution of dividends for income tax purposes. The letter follows the decision of the Austrian Supreme Administrative Court concerning short-term Cum-Ex-Trades and withholding tax refunds.