CFE Statement on Credit Suisse regarding withholding taxes, losses & territoriality
CFE Tax Advisers Europe’s ECJ Task Force has issued an Opinion Statement on Case C-601/23, Credit Suisse Securities (Europe) Ltd v Diputación Foral de Bizkaia, in which the Court of Justice of the EU examined whether the denial of a withholding tax refund to a non-resident loss-making company infringes the free movement of capital.
CFE notes that the implications of Credit Suisse may extend beyond dividend withholding taxes. While the decision is limited to the facts of the case, the reasoning could be relevant for other types of withholding taxes or source-based taxation of income. The potential interaction with group taxation regimes may also give rise to questions about how domestic loss-compensation mechanisms should apply in cross-border scenarios, particularly where profit and loss offsetting is permitted among domestic group members.
CFE observes that the Credit Suisse judgment did not introduce new legal reasoning beyond that set out in Sofina, and the Court did not address the broader academic and practical issues raised in response to that earlier decision. The scope of the case law remains to be further clarified, in particular in relation to the treatment of losses and the implementation of equivalent mechanisms for non-resident taxpayers.
