C-292/04, Meilicke and Others


Judicial vacations are great when you have some catching up to do. So here are some recent interesting cases and other relevant “news items” I did not yet report about. In order to label them properly, I will spread them out over multiple posts.

In C-292/04, Meilicke and Others, the Finanzgericht Köln asked the Court for a preliminary ruling on whether certain German tax legislation was compatible with Articles 56 EC and 58 EC.


Under that legislation, on a distribution of dividends by a capital company, a shareholder who was fully taxable in a Member State was entitled to a tax credit, calculated by reference to the corporation tax rate on the distributed profits, if the dividend-paying company was established in that same Member State but not if it was established in another Member State.

The Court reiterated that, although direct taxation fell within their competence, the Member States must none the less exercise that competence consistently with Community law (see e.g.
Case C-311/97 Royal Bank of Scotland (1999) and Case C-319/02 Manninen (2004)).

The Court held that the tax legislation at issue could deter persons who were fully taxable in Germany for income tax purposes from investing their capital in companies established in other Member States.

The Court rejected the argument of Germany that the legislation was necessary in order to preserve the cohesion of the German tax system. (see also
Case C‑204/90 Bachmann (1992) and Case C‑300/90 Commission v Belgium (1992)).

It concluded that the German tax was incompatible with Articles 56 EC and 58 EC.