Illegal tax

Aberdeen Property Fininvest Alpha Oy is a Finnish-resident real estate company wholly owned by a real estate fund structured as a Luxembourg société d’investissement à capital variable (SICAV) a type of open-ended investment fund.

Under Finnish law dividends paid by a Finnish company were normally exempt from tax but dividends paid to a non-resident company which was considered to be a company under EU law were subject to withholding tax.

The company appealed and the Finnish courts referred the case to the European Court of Justice.

The court ruled that articles 43 and 48 of the EC Treaty precluded a member state from exempting dividends distributed by a subsidiary resident in that state to a company resident in that state but charging withholding tax on similar dividends paid to a parent company in the form of an open-ended investment company resident...