France vs Foncière Vélizy Rose: CASE SUMMARY
Case Information
- Court: Council of State, 9th – 10th Joint Chambers, France
- Case No.: 471147
- Applicant: Foncière Vélizy Rose (FVR)
- Defendant: Minister to the Prime Minister, Responsible for Budget and Public Accounts
- Judgment Date: 8 November 2024
- Download the FULL JUDGMENT
Judgment Summary
The Council of State reviewed an appeal by Foncière Vélizy Rose (FVR) regarding the withholding tax on an interim dividend of EUR 3.6 million distributed to Vélizy Rose Investment (VRI), a Luxembourg-based entity, which was subsequently paid to Dewnos Investment. The Paris Administrative Court of Appeal had dismissed FVR’s claim to discharge this withholding tax, prompting the appeal.
FVR argued that the withholding tax exemption under Article 119 ter of the French General Tax Code (GTC) applied as VRI qualified as the beneficial owner of the dividend. The court examined whether VRI’s status as the dividend’s beneficial owner met the conditions for the withholding tax exemption. Noting that VRI’s sole function was holding FVR’s shares and that it transferred the full dividend to Dewnos Investment the following day, the court ruled that VRI could not be deemed the beneficial owner.
FVR further contended that applying Articles 119a and 119b of the GTC infringed on the freedom of establishment under Articles 49 and 54 of the Treaty on the Functioning of the European Union (TFEU). The court rejected this, aligning with earlier European jurisprudence, holding that beneficial ownership requirements did not contravene EU law or directives.
The Council of State upheld the lower courts’ findings, confirming that VRI’s lack of effective beneficial ownership disqualified FVR from the withholding tax exemption. The appeal was dismissed, and the judgment underlined the critical nature of beneficial ownership in tax treatyA Double Taxation Agreement (DTA), also known as a Double Taxation Treaty (or a Tax Treaty), is an international tax treaty between two or more countries that aims to prevent individuals or businesses from being taxed twice on the same income. With globalisation and the increase in cross-border economic activities, DTAs have become essential tools for promoting trade, investment, and... applications.
