PwC

Tax & Legal

Tax & Legal

Foreign tax credit precluded if domestic income exempt despite being taxed below nominal rate; freedom of establishment vs. capital m


The ECJ has held that freedoms of establishment and of capital movement preclude national legislation relieving foreign tax by credit as opposed to the exemption of domestic source income where the actual corporation tax paid by domestic companies is generally less than the nominal rate. It has also accepted the freedom of capital movement as relevant, unless the national legislation was aimed at controlling interests. Continue reading