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Kronos International v Finanzamt Leverkusen

In Kronos International v Finanzamt Leverkusen (C-47/12 – 11 September 2014) the CJEU found that the exclusion of a tax advantage in a cross-border transaction was not a restriction to the freedom of capital.

Kronos a US incorporated company managed in Germany was a holding company which held direct holdings in companies incorporated in other European jurisdictions and in Canada.

The dividends paid by foreign subsidiaries which were exempt from tax under the relevant double tax treaties (the exemption method) were not taken into account in the calculation of the relevant basis for the calculation of Kronos’ liability to German corporation tax.

The CJEU accepted that in a situation where the company receiving the dividends made a loss the refunding of the tax paid by the company distributing them could be seen as a tax-flow advantage and that the exclusion of this advantage in...

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