Official Journal of the European Union

C 37/10

Action brought on 23 November 2007 — Commission of the European Communities v Kingdom of the Netherlands

(Case C-521/07)

(2008/C 37/12)

Language of the case: Dutch


Applicant: Commission of the European Communities (represented by: P. van Nuffel and R. Lyal, Agents)

Defendant: Kingdom of the Netherlands

Form of order sought

Declare that, by not exempting dividends paid to companies established in Norway or Iceland from withholding tax on dividends under the same conditions as dividends paid to Netherlands companies, the Kingdom of the Netherlands has failed to fulfil its obligations under Article 40 of the EEA Agreement.

order the Kingdom of the Netherlands to pay the costs.

Pleas in law and main arguments

According to Netherlands tax law, tax on dividends is not withheld when a Netherlands company pays a dividend to another company established in the Netherlands which holds at least 5 % of the shares of the company which pays the dividend; by contrast the tax on dividends is withheld when the company which receives the dividend is established in Norway or Iceland, unless the receiving company owns at least 25 % (Norway) or 10 % (Iceland) of the shares in the Netherlands company which pays the dividend.

The Commission takes the view that Netherlands tax law thus gives rise to discrimination between companies established in Norway or Iceland and those established in the Netherlands. That constitutes a restriction on the free movement of capital between the Netherlands and Norway and Iceland, contrary to Article 40 of the Agreement on the European Economic Area (1) (‘the EEA Agreement’) concerning the free movement of capital, a provision which, in essence, corresponds to Article 56 EC. The situation of Norwegian and Icelandic companies which have stakes in the capital of a Netherlands company is in fact objectively comparable to that of a Netherlands company holding such a stake. The Netherlands rules cannot be justified. Whilst it true that Member States may take measures to prevent abuse, those measures must none the less be proportionate to the objective pursued, which is not the case here.

(1)  OJ L 1, 3.1.1994.