In recent years, courts have stopped treating dividend WHT as a minor issue. They now view it as central to investor protection. When domestic laws over-tax non-residents compared with locals, judges intervene. They order refunds and reset expectations. For portfolio managers, these rulings now shape recovery yields and cash drag.
Free movement and dividend tax: a new baseline
EU case law has tightened restrictions on discriminatory dividend WHT. In AllianzGI-Fonds AEVN (C-545/19), the CJEU struck down Portugal’s rules. They exempted domestic UCITS but taxed foreign UCITS at source. The court found this breached free movement of capital.
Earlier, Denmark lost a similar case. In Fidelity Funds (C-480/16), residence-based discrimination was ruled unlawful. The message was clear: comparable vehicles must face equal treatment. Residence cannot justify higher dividend tax.
The Netherlands faced the same outcome in Köln-Aktienfonds Deka (C-156/17). The court confirmed that residence rules cannot impose a heavier WHT burden without objective justification.
Form versus substance: when wrappers don’t matter
In A SCPI (C-342/20), Finland denied relief because a foreign fund used a corporate form. The court rejected this. It said function and supervision matter more than legal labels. Domestic and foreign funds must be judged on substance.
This matters for planning. If a wrapper is the only barrier to WHT relief, case law is now on your side.
Net-versus-gross taxation: insurers push boundaries
On 7 November 2024, the CJEU made a decisive ruling. In XX (C-782/22), it ruled against the Netherlands. Non-resident insurers were taxed on gross dividends, while residents enjoyed net taxation through deductions. That disparity breached EU law.
The fallout is spreading. Insurers in Belgium and other states now see opportunities. Claim strategies are shifting quickly.
Spain and Italy: courts driving investor outcomes
Spain has been active. A December 2024 ruling struck down rules penalising loss-making non-resident investors. It held that dividend WHT should not become irrecoverable when residents can offset losses. Refund claims are already underway.
Spain’s Supreme Court has also ruled for parity. Some non-resident AIFs now qualify for a 1% rate, matching local funds. Residence alone no longer justifies 19% taxation.
Italy has moved in the same direction. Courts there have struck down differential WHT on dividends paid to non-EU funds. They now align foreign investors with domestic pension funds and corporates. Decisions often reduce WHT to the 1.2% benchmark enjoyed locally.
Anti-abuse rules remain a barrier
These wins do not open the floodgates. The CJEU’s Danish beneficial-ownership cases (2019) remain firm. Courts still deny treaty relief where structures are artificial. Shell entities with no decision-making or risk-sharing fail the test.
For compliant investors, substance matters. Courts demand proof of beneficial ownership. They want evidence of governance, commercial rationale, and economic risk. Without it, treaty benefits collapse.
Policy rewrites triggered by rulings
Court rulings are not only about refunds. They force governments to rewrite laws. After AllianzGI, Portugal reformed its fund tax rules. Spain is recalibrating outcomes for foreign funds. Italy extended exemptions after repeated litigation.
In March 2025, the ECJ also struck Belgium’s dividend deduction under the Parent-Subsidiary Directive. This showed the court’s intolerance for indirect discrimination. Germany may follow soon, as its Federal Fiscal Court has referred fresh WHT questions to the CJEU.
What this means for recovery strategy
The lessons are practical. First, demonstrate comparability. If a domestic fund enjoys relief, prove that your fund is genuinely similar in function and regulation. Courts reward this work.
Second, validate substance. Show that you are the beneficial owner and that real decisions occur in your structure. Governance documents and risk management records are key.
Third, challenge gross-versus-net disparities. Where locals get deductions and foreigners do not, you have a strong case. The C-782/22 ruling is your precedent.
Finally, act fast. Claim deadlines differ across jurisdictions. Spain, Italy, and the Netherlands are hot zones now. Germany may soon open as well. Timely filing secures your rights.
Conclusion
Dividend WHT is no longer treated as a technical footnote. Courts view it as a rights issue. They are closing the gap between domestic and foreign investors. Anti-abuse rules still apply, but clean cases now win.
For investors, the prize is real. Refunds reduce leakage, raise yields, and free trapped cash. The opportunity lies in aligning claims with recent case law and proving substance.
Global Tax Recovery specialises in exactly this. We run multi-jurisdictional reclaim strategies, mapping case law to investor profiles. Our expertise helps clients recover excess dividend WHT while staying compliant. In a world where courts are shaping access to treaty benefits, a strong recovery partner makes all the difference.
