No breach of Article 43

The proceedings in this case followed on from the earlier long-running Hoechst and Pirelli litigation. The issues related to the taxation of dividends paid by a UK company to an EU parent company under the advance corporation tax system.

The question was whether the UK was in breach of article 43 of the EC treaty on the freedom of establishment by charging the same rate of advance corporation tax on dividends paid by a UK-resident company to its non-UK resident or UK-resident parent where the UK tax credit given to the UK parent would be equivalent to the total advance corporation tax but the credit paid to a non-UK resident parent would be a partial one.

The High Court judge said that the requirement for a greater amount of advance corporation tax than the credit available under the double tax convention did not...