Supreme Court refers WHT cases for non-resident investment funds to CJEU | Deloitte


Supreme Court refers WHT cases for non-resident investment funds to CJEU

In two similar earlier cases, the Dutch Supreme Court rejected WHT refund requests. Now, the Dutch Supreme Court believes it is not beyond reasonable doubt that its earlier decisions are correct and has decided to refer the current cases to the CJEU.

3 March 2017

Dutch version

A Dutch first instance court has referred two cases involving requests for refunds of Dutch dividend withholding tax to the Dutch Supreme Court for a preliminary ruling. Over the last decade, thousands of foreign investment funds have filed refund requests on the grounds that the tax was levied contrary to EU law. The Dutch tax authorities have systematically rejected the investment fund claims. Now there are about 1,500 appeals on the denied requests pending before the Dutch first instance tax court (and many more in the administrative phase before the first instance tax court). To alleviate the burden on the first instance tax court, the court has referred two of the cases to the Supreme Court to obtain clarity on the issue.

On 3 March 2017, the Dutch Supreme Court referred both cases to the European Court of Justice (CJEU) for a preliminary ruling. The Dutch Supreme Court believes it is not beyond reasonable doubt (anymore) what the answers should be and has therefore decided to refer both cases to the CJEU.


Previous Supreme Court decisions

The Supreme Court ruled on 10 July 2015 that a Luxembourg SICAV that had received Dutch sourced dividends was not entitled to a refund of the withholding tax. This decision basically meant that non-resident investment institutions, such as SICAVs, never will be entitled to a refund of Dutch dividend withholding tax.

Shortly before the Supreme Court decision in the SICAV case, the court had ruled that a Finnish “open-ended” investment fund was not comparable to a Dutch FII. In that case, however, the Supreme Court did not refer to the purpose of Dutch law, but instead determined that the Finnish fund was not in a comparable situation as an FII because it did not distribute the dividends received to its own shareholders within eight months of receiving the dividends (which is one of the requirements under Dutch law to qualify for FII status).


Preliminary ruling request

The above Supreme Court decisions have resulted in considerable discussion and debate in the tax literature. Many authors argue that the decisions are not in line with established case law or that the Supreme Court should have referred the cases to the Court of Justice of the European Union (CJEU) for a preliminary ruling. Due to the growing number of comparable cases pending before the first instance tax court, the first instance tax court has sought for clarity from the Supreme Court.

The two cases in which the Dutch Supreme Court now has requested for a preliminary ruling from the CJEU involve dividend distributions made by Dutch resident companies to a UK investment fund and a German investment fund respectively.


Supreme Court decision: Preliminary ruling

The Dutch Supreme Court notes that there are many different views on the relation between the Supreme Court’s previous judgments and EU law as interpreted by the CJEU. Several different approaches are discussed. The Supreme Court takes the position that its previous judgments were not proven wrong by the CJEU case Miljoen and others which was rendered by the CJEU on 17 September 2015, shortly after the Supreme Court issued its Luxembourg SICAV decision. The Supreme Court believes that this is confirmed in the CJEU case Pensioenfonds Metaal and Techniek. On the other hand, the Supreme Court acknowledged that in the comparable case Fidelity Funds (C-480/16), as referred by a Danish court, preliminary rulings were requested from the CJEU as well.

Overall, the Dutch Supreme now believes that it is not beyond reasonable doubt (anymore) that its earlier decisions are correct. As such, it has decided to refer the cases to the CJEU.



We agree with the Dutch Supreme Court’s decision to refer the cases to the CJEU. This decision is very supportive for proceeding with what we have been advising our clients: keep on protecting claim rights where the amounts involved are material. It is now also advisable to consider submitting (additional) refund requests with the Dutch tax authorities. This, not only for EU based investment funds, but also for investment funds based outside the EU. If the CJEU would in the end decide that the Dutch Supreme Court’s case law misinterpreted EU law, the Finnish and the Luxembourg investment fund may be eligible for a refund after all!

Source: Dutch Supreme Court of 3 March 2017, in relation to cases 16/3954 and 16/3955

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