Press Release: Direct Taxation: The European Commission refers Germany to the European Court of Justice over its discriminatory taxation of outbound dividends

The European Commission decided to refer Germany to the European Court of Justice for its tax provisions concerning outbound dividend payments to companies. Germany taxes dividends paid to foreign companies more heavily than dividends paid to domestic companies. The Commission considered the higher taxation of outbound dividends to be contrary to the EC Treaty and the EEA Agreement, as it restricts the free movement of capital and the freedom of establishment provided for in Article 56 of the Treaty and Article 40 of the EEA Agreement.