Double Taxation of Foreign Dividends: The Damseaux Case Aiming at the Wrong Target! Criticism Should Be Directed towards France and Not Belgium

Abstract

The Damseaux judgment of 16 July 2009 (Case C-128/08) marks the unsuccessful end of the efforts deployed by Belgian taxpayers and by the European Commission (Case C-307/08, Commission v. Belgium, presumably to be dropped shortly) to have Belgium shoulder responsibility (by way of the grant of a foreign tax credit) for the French withholding tax on outbound dividends received by Belgian taxpayers. We will review these efforts hereinafter, and the factors that appear to have led to their unsuccessful outcome. We will also argue that Mr Damseaux might have been more successful in his efforts to avoid the double taxation of his French dividends if he had, instead, lodged a claim against the French tax authorities: He could have argued that the French withholding tax is levied in breach of European law following the end of the reimbursement by the French tax authorities to Belgian resident shareholders of the French ‘Avoir Fiscal’.