«(Directive 90/435/EEC – Corporation tax – Parent companies and subsidiaries of different Member States – Concept of withholding tax)»

1.. Approximation of laws – Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States – Directive 90/435 – Exemption, in the Member State of the subsidiary, from withholding tax on profits distributed to the parent company – Concept of withholding tax – Charge envisaged by a double taxation convention (Council Directive 90/435, Art. 5(1))

2.. Approximation of laws – Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States – Directive 90/435 – Exemption, in the Member State of the subsidiary, from withholding tax on profits distributed to the parent company – Exception for domestic or agreement-based provisions designed to eliminate or lessen economic double taxation of dividends – Charge envisaged by a double taxation convention (Council Directive 90/435, Arts 5(1) and 7(2))

3.. Approximation of laws – Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States – Directive 90/435 – Domestic or agreement-based provisions designed to eliminate or lessen economic double taxation of dividends – Compliance with the obligations to state reasons and to consult the Parliament and the Economic and Social Committee (Arts 94 EC and 253 EC; Council Directive 90/435, Art. 7(2))

JUDGMENT OF THE COURT (Fifth Chamber) 25 September 2003 (1)

((Directive 90/435/EEC – Corporation tax – Parent companies and subsidiaries of different Member States – Concept of withholding tax))

In Case C-58/01,

REFERENCE to the Court under Article 234 EC by the Special Commissioners of Income Tax (United Kingdom) for a preliminary ruling in the proceedings pending before them between

and

on the interpretation of Article 5(1) of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 1990 L 225, p. 6, corrigendum at OJ 1991 L 23, p. 35) and the interpretation and validity of Article 7(2) of that directive,

THE COURT (Fifth Chamber),,

composed of: M. Wathelet (Rapporteur), President of the Chamber, D.A.O. Edward, A. La Pergola, P. Jann and A. Rosas, Judges,

Advocate General: A. Tizzano,

after considering the written observations submitted on behalf of:

having regard to the Report for the Hearing,

after hearing the oral observations of Océ van der Grinten NV, represented by G. Aaronson and M. Barnes; the United Kingdom Government, represented by P. Ormond, acting as Agent, L. Henderson QC and M. Hoskins, Barrister; the Italian Government, represented by G. De Bellis; and the Commission, represented by R. Lyal, at the hearing on 3 October 2002,

after hearing the Opinion of the Advocate General at the sitting on 23 January 2003,

gives the following

Community legislation

National law

Advance corporation tax

Tax credit

The double taxation convention

Dividend paid by UK company 80

Tax credit to UK individual 20

½ tax credit to Netherlands company 10

90Less 5% tax on (80 + 10) 4.5

Total received by Netherlands company 85.5

Observations submitted to the Court

The Court's answer

Observations submitted to the Court

The Court's answer

Observations submitted to the Court

The Court's answer

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Special Commissioners of Income Tax (United Kingdom) by order of 6 February 2001, hereby rules:

Wathelet

Edward

La Pergola

Jann

Rosas

Delivered in open court in Luxembourg on 25 September 2003.

R. Grass

M. Wathelet

Registrar

President of the Fifth Chamber