The European Court of Justice today handed down its judgment in Case C-310/09 Accor. The judgment follows closely the principles laid down in the FII case and is a complete win for the taxpayers.
The judgment was concerned with the French advance corporation tax system. Under that system an advance charge fell due to be paid by companies upon making distributions to their shareholders. This advance charge could be set off by a tax credit (avoir fiscal) which only attached to nationally sourced dividends, with the result that the advance charge was effectively only levied on foreign sourced dividends.
The ECJ held that the French system was contrary to the freedom of establishment (Art. 49 TFEU) and the free movement of capital (Art. 56 TFEU). France was precluded from refusing restitution of the charge on grounds of unjust enrichment as this defence was exceptional and could only be relied upon where a charge was directly passed on to a purchaser of goods.
Whilst France was entitled to request proof of underlying tax, it could only do so if to adduce that proof was not impossible or excessively difficult. In particular France could not request such proof for periods outside the time for which the company was required to keep records of underlying tax under the law of its state of residence.