Spain: Compatibility with EU law of application of nonresident income tax on dividend distributions (CJEU referral)
A CJEU referral concerning application of nonresident income tax on dividend distributions
A CJEU referral on application of nonresident income tax on dividend
The Superior Court of Justice of the Basque Country on 19 September 2023 referred to the Court of Justice of the European Union (CJEU) for a preliminary ruling regarding whether the method of application of the nonresident income tax (IRNR) of Vizcaya to dividend distributions to a nonresident company is compatible with EU law.
In particular, the court seeks a ruling regarding whether the retention system under the IRNR produces an unjustified difference in treatment between resident and nonresident dividend recipients because the tax withheld on a dividend distribution to a resident recipient is treated as a payment on account of the final settlement of corporate tax, which may be reduced to zero if the recipient is in a loss position. By contrast, the IRNR withheld on a dividend distribution to a nonresident entity is the final tax, regardless of whether the recipient generates profits or losses in the relevant tax period.
Read a November 2023 report (Spanish) [PDF 528 KB] prepared by the KPMG member firm in Spain
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.