Source: Weekblad Fiscaal Recht, 2015/78, pp. 78-82.
Author: Isabella de Groot

In this article the author discusses the Kronos case, which was dealt with by the Court of Justice of the European Union (“CJEU”). In dispute in this case was whether the former German legislation, on the basis of which (under certain conditions) the full credit method was applied to domestic dividends and the exemption method to foreign dividends, was contrary to the free movement of capital.

The author of this article discusses the relationship between this judgment and earlier CJEU case law on exemption and credit methods and loss set off. In addition, she points to inconsistencies in the judgment and indicates what she believes would have been a more correct conclusion. The author believes that the CJEU not only contradicts itself in this case, but that its conclusions on some points are also contrary to other case law.

All in all, the author believes that it would have been better in this case if the CJEU had recognized that the exemption and the credit methods are not equivalent, but that due to the need to preserve the balanced allocation of the power to impose tax, Kronos is not entitled to a refund of foreign profit tax.