Opinion Statement ECJ-TF 2/2016 on the Case C-18/15, on the admissibility of gross withholding taxation of interest

This is an Opinion Statement prepared by the CFE ECJ Task Force on Case C-18/15, in which the 5th Chamber of the Court of Justice of the European Union (ECJ) delivered its judgment on 13 July 2016, following the opinion of Advocate General Juliane Kokott of 17 March 2016. It is a response to a request from the Supremo Tribunal Administrativo (Supreme Administrative Court, Portugal) for a preliminary ruling, under Article 267 TFEU.

The judgment is a further interpretation of the permissibility of withholding taxation within the EU. In relation to interest, the Court holds that non-resident taxpayers may be subject to with-holding taxes, even if comparable residents pursuing the same activity are not. Nonetheless, those non-residents may not be taxed on gross income when comparable residents are taxed on net profits. Member States have to grant those non-residents the same right to deduct ex-penses directly connected with their business activity.