Court of Justice (Grand Chamber) 18 December 2007, C-101/05 (Skatteverket v A.)

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The Court of Justice ruled that Articles 56 EC and 58 EC do not preclude national legislation that restricts income tax exemptions for dividends distributed as shares to companies established within the EEA or in states with an information-exchange tax convention. While such rules constitute a restriction on the free movement of capital between Member States and third countries, they are justified by the need to ensure the effectiveness of fiscal supervision where compliance cannot be verified without obtaining information from the state of establishment. The Court further clarified that Article 56(1) EC has direct effect in relations with third countries and that the concept of capital restrictions should generally be interpreted consistently regardless of whether the movement is intra-Community or involves a non-member state.AI