ECJ: 5% add-back of tax credits for withholding tax at source abroad compatible with Parent-Subsidiary Directive

On 3 April 2008, the European Court of Justice (ECJ) gave its decision in the case of Banque Féderative du Crédit Mutuel v. Ministre de l'Économie, des Finances et de l'Industrie (C-27/07). The French Administrative Supreme Court had requested a preliminary ruling from the ECJ on 17 January 2007.

The ECJ held that the concept of "profits distributed by the subsidiary", within the meaning of the last sentence of Art. 4(2) Parent-Subsidiary Directive 90/435/EEC, is to be …