In its recent judgment in the ACC Silicones case, the ECJ ruled that the evidence requirements set forth in Sec 32b para 5 German CITA regarding the non-credibility of German withholding tax at the level of the foreign dividend recipient and its direct/indirect shareholder are incompatible with the free movement of capital. The obligation to provide the respective evidence was only foreseen for non-resident taxpayers, and hence led to a detrimental treatment of the comparable cross-border situation. More importantly, the ECJ dismissed all justifications brought forward by the German government and found the unequal treatment to amount to an unlawful discrimination. As the article elaborates, the reasoning of the court in ACC Silicones not only offers interesting novelty insights into the EU law demands towards relief from double taxation of portfolio dividends in the source state, but also raises the question whether Sec 21 para 1 no 1a CITA, which is the equivalent to the German Sec 32b para 5 CITA, can still be found to be in line with the fundamental freedoms.
