Brisal decision: The CJEU rules that withholding taxes may be contrary to EU law

The Court of Justice of the European Union (CJEU) delivered its judgment in the Brisal case in July which could result in a fundamental change to the manner in which withholding taxes are applied on payments between EU member states and reduce the effective tax which may be suffered on certain cross-border payments.

The ruling may result in a lower withholding tax (WHT) burden for certain EU resident financial institutions, as well as the potential for reclaims by EU resident financial institutions which have suffered interest WHT on payments from other EU member states. The ruling may also apply to non-bank commercial lenders as well as to other payments which may be subject to WHT such as royalties.

 

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