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Netherlands tax law exempted companies from withholding tax for dividends paid to corporate shareholders provided the shareholding companies had a shareholding of between 5% and 25% and were established in the Netherlands.
Overseas companies were not exempt.
A Portuguese company Amurta objected and claimed repayment of tax.
A preliminary ruling was sought from the European Court of Justice on whether this infringed the free movement of capital and whether it made a difference if the non-resident company was granted a tax credit in its own state.
The European Court of Justice said that articles 56 and 58 of the EC Treaty did not allow member states to introduce legislation which exempted resident companies from withholding tax on dividends from subsidiary companies in the same member state but to charge withholding tax on non-resident companies.
Furthermore the member state could not rely on the other member...
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