Austria: Exclusion of nonresident investment funds from dividend withholding tax refunds compatible with EU law (CJEU judgment)

Exclusion does not constitute a restriction on the free movement of capital in violation of EU law

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May 15, 2025

The Court of Justice of the European Union (CJEU) on April 30, 2025, held (C-602/23 Finanzamt für Großbetriebe)—in response to a referral from the Austrian Supreme Administrative Court—that the exclusion under Austrian tax law of nonresident investment entities comparable to undertakings for collective investment in transferable securities (UCITS), from dividend withholding tax refunds available to non-transparent legal entities, does not constitute a restriction on the free movement of capital in violation of EU law.

Specifically, the CJEU held that the Austrian rules did not breach Article 63 of the Treaty on the Functioning of the European Union (TFEU), provided that the income generated by such entities is attributed to their unitholders and taxed at the unitholder level in the entity’s state of residence.

Read a May 2025 report prepared by KPMG's EU Tax Centre

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