2024-08-08-KPMG_s_EU_Tax_Centre-Euro_Tax_Flash_from_EU_Tax_Centre_6页_643kb

Euro Tax Flash Analysis: CJEU Decision on Swedish Dividend Withholding Tax

Date: July 7, 2024 (Summary)
Source: KPMG EU Tax Centre, Issue 545
Author: KPMG Sweden, EU Tax Centre

Key Summary

On July 29, 2024, the Court of Justice of the European Union (CJEU) delivered its judgment in case C-39/23. The case concerned the compatibility with EU law of the Swedish withholding tax levied on dividends paid by Swedish companies to foreign (Finnish) public pension funds.

Core Finding

The CJEU unanimously upheld the recommendation from the Advocate General:

1. Swedish law imposing different tax treatment (exemption for Swedish public pension funds, 30% withholding tax for foreign funds) is contrary to EU law under Article 63 of the TFEU (Free Movement of Capital).
2. Differentiation based on residency (not on the nature of the institution) between resident and non-resident public pension funds constitutes a restriction on capital movements, provided the funds are otherwise objectively comparable.

Comparison Criteria

The Court provided guidance on assessing objective comparability:

• Distinguishing Criteria: Should be limited solely to elements explicitly introduced by the national legislation itself and relevant to the specific restriction.
• Features to Consider: Purpose, functions, core tasks, regulatory frameworks, and the nature of the organization should be examined, confirming the Finnish funds should be treated similarly to Swedish ones in this context.
• Place of Residence: In this case, the crucial distinguishing factor remained the residence of the funds.

Impact

The decision reinforces previous CJEU jurisprudence regarding foreign pension funds and capital freedom. Crucially, it aims to harmonize the criteria for distinguishing comparable situations.
The Swedish Supreme Administrative Court will now render its final judgment based on this ruling.

Swedish Supreme Administrative Court Consultation: KPMG Comment Analysis