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The implications of the High Court judgment in the FII group litigation on the taxation of dividends are explored by SIMON WHITEHEAD
KEY POINTS
- UK courts have to decide if UK rules meet EU conditions.
- Holdings of over 10% in EU companies are under debate.
- Imposing tax under Schedule D Case V is unlawful on dividends from EU-resident companies.
- Other issues have yet to be decided.
It is two years since the European Court of Justice gave its views on whether the UK’s dividend taxation system was compatible with community law.
The system treats dividend receipts in the hands of a corporate shareholder differently depending on whether or not the paying company is UK resident. If it is UK resident the dividend income is exempt under TA 88 s 208.
If the dividend comes from a non resident it will be taxable under TA 88 s 18 (Schedule D Case V) but with a credit up...
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