In a decision reversing a trend toward favoring taxpayers, the European Court of Justice ruled Thursday that copier company Oce N.V. must pay a British withholding tax.
Oce claimed that a 5% withholding tax its British subsidiary paid in 1992 and 1993 was illegal because British companies didn’t pay a similar tax. European law prohibits such “discrimination” and holds that dividends cannot be taxed twice, once in their subsidiary’s domicile and once in the homeland.
But the court ruled that Oce’s dividends escaped double taxation because the Netherlands allowed the company to deduct its payments to the British Internal Revenue Service. As a result, judges said the British tax didn’t discriminate against companies operating within the single European market.