Fiscal Cohesion in the Taxation of Cross-Border Dividends (Part One)

The taxation of dividends is characterized by the fact that the taxable object stems from profits that will usually have already been taxed at the level of the distributing company. If the second layer of taxation at the shareholder level constitutes economic double taxation, to what extent, if at all, such double taxation should be avoided, and how this could be done are key questions that are inseparably tied to any form of corporate tax. In the light of the developments, this article attempts to determine the compatibility of dividend reliefs available only in a domestic context with the free movement of capital and takes a systematic approach. It pays specific attention to the concept of fiscal cohesion, which is commonly regarded as obscure and with few practical implications, but in fact – as will be seen – turns out to be a crucial factor in evaluating the conformity of cross-border dividend taxation with EC law