European Taxation of Dividends, Interests and Royalties: the impact on Third countries investors

The article analyses the current “state of the art” of the tax harmonization across the European Union, and the attention is focused on the three most important drivers of this evolution o the national taxation systems of the Member states. The first one is the Treaty and the fundamental freedoms enshrined in it. In particular, the author emphasises the importance of the freedom of establishment and the free movement of capitals as provisions adequate to prevent international double taxations or an overall unfair taxation in one state of the Union or in another. The second one is the contribute of the European Court of Justice which stretched to the very limits the interpretation of the fundamental rights in order to cover the possible loopholes of positive EU law on Direct taxation. In other words, where a specific competence of European Union to legislate on tax matters is missing, then the same result could be possibly obtained interpreting the mentioned above basic rules of the Treaty. The third one is formed by the few directives on Direct taxation which have been passed by the Council in the last decades and covering mainly the so called passive income (interests, royalties and dividends) considered as a sort of priority in the Union policy. The reason justifying this intervention can be found in the fact that these very income are the most influenced by the not complete harmonization of the Treaty and the ones which more than any others are feasible to be produced in a cross border context. While labour income, for instance, is generally produced by workers in the states where they also resides, with some remarkable exceptions, it is quite common for a company to have non resident shareholders, or to have a loan from a non resident corporation or bank. The author analyses the content of the most important directives pinpointing the aspects which are relevant also for the non European investors in any Member state and the possibility for permanent establishment as well to invoke the protection of EU Tax law.