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Discriminatory taxation of investment funds in the European Union: How the CJEU Case-law keeps ignoring neutrality

Author

Listed:
  • Dourado, Ana Paula
  • Müller, Jessica
  • Rangel, Leidson
  • Spengel, Christoph

Abstract

This paper examines the legal consequences and assesses the economic impact of the differing tax treatment of investment funds in Portugal, Germany, and Luxembourg before and after the Allianzgi-Fonds case decision. Before the Allianzgi-Fonds case decision the Portuguese investment taxation discriminated against foreign investments by levying a withholding tax compared to domestic ones. As a result of the Allianzgi- Fonds landmark case, our paper examines whether the Portuguese CIT-exemption extended to non-resident UCITS will lead to tax neutrality treatment of investment funds in the EU. Overall, we confirm that the abolishment of the discriminatory withholding tax can considerably reduce the effective tax levels for cross-border investments. Moreover, the abolishment also diminishes the domestic investment bias. Nonetheless, the results do not confirm the achievement of neutrality.

Suggested Citation

  • Dourado, Ana Paula & Müller, Jessica & Rangel, Leidson & Spengel, Christoph, 2024. "Discriminatory taxation of investment funds in the European Union: How the CJEU Case-law keeps ignoring neutrality," ZEW Discussion Papers 24-080, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:312198
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    Keywords

    European Court of Justice; Funds; Investor; Taxation; Portugal;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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