Provisional text

1 August 2025 (*)

( References for a preliminary ruling – Taxation – Common system of taxation applicable in the case of parent companies and subsidiaries of different Member States – Directive 2011/96/EU – Article 4(1)(a) – Prohibition on taxing profits received by the parent company – Prevention of double taxation of dividends – Scope – Regional tax on production activities – Inclusion of 50% of dividends received by the parent companies in the basis of assessment for that tax )

In Joined Cases C‑92/24 to C‑94/24,

REQUESTS for a preliminary ruling under Article 267 TFEU from the Corte di giustizia tributaria di secondo grado della Lombardia (Tax Court of Second Instance, Lombardy, Italy), made by decisions of 6 October 2023, received at the Court on 24 January 2024, in the proceedings

Agenzia delle Entrate – Direzione regionale della Lombardia,

THE COURT (Fourth Chamber),

composed of I. Jarukaitis, President of the Chamber, N. Jääskinen, A. Arabadjiev, M. Condinanzi and R. Frendo (Rapporteur), Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–Banca Mediolanum SpA, by G. Escalar and A. Siragusa, avvocati,

–the Italian Government, by G. Palmieri, acting as Agent, and by G. Galluzzo, avvocato dello Stato,

–the European Commission, by A. Ferrand, W. Roels and P. Rossi, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 27 March 2025,

gives the following

These requests for a preliminary ruling concern the interpretation of Article 4 of Council Directive 2011/96/EEC of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 2011 L 345, p. 8).

The requests have been made in proceedings between Banca Mediolanum SpA and the Agenzia delle Entrate – Direzione regionale della Lombardia (Tax Office – Regional Directorate of Lombardy, Italy) (‘the tax authority’) concerning applications for partial reimbursement of the imposta regionale sulle attività produttive (regional tax on production activities) (‘IRAP’).

Legal context

European Union law

Recital 4 of Council Directive 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ 2004 L 7, p. 41) stated:

‘Article 2 of [Council Directive 90/435/EEC of 23 July 1990 (OJ 1990 L 225, p. 6)] defines the companies coming within its scope. The Annex contains a list of companies to which the Directive applies. …’

Recitals 1 and 3 of Directive 2011/96 state:

‘(1) [Council Directive 90/435] has been substantially amended several times … Since further amendments are to be made, it should be recast in the interests of clarity.

…

(3) The objective of this Directive is to exempt dividends and other profit distributions paid by subsidiary companies to their parent companies from withholding taxes and to eliminate double taxation of such income at the level of the parent company.’

Article 2 of Directive 2011/96 provides:

‘For the purposes of this Directive the following definitions shall apply:

(a) “company of a Member State” means any company which:

…

(iii) … is subject to one of the taxes listed in Annex I, Part B, without the possibility of an option or of being exempt, or to any other tax which may be substituted for any of those taxes;

…’

In the version prior to amendment by Council Directive 2014/86/EU of 8 July 2014 (OJ 2014 L 219, p. 40), which the Member States had to transpose into their national law by 31 December 2015, Article 4(1) of Directive 2011/96 provided:

‘Where a parent company or its permanent establishment, by virtue of the association of the parent company with its subsidiary, receives distributed profits, the Member State of the parent company and the Member State of its permanent establishment shall, except when the subsidiary is liquidated, either:

(a) refrain from taxing such profits; or

(b) tax such profits while authorising the parent company and the permanent establishment to deduct from the amount of tax due that fraction of the corporation tax related to those profits and paid by the subsidiary and any lower-tier subsidiary, subject to the condition that at each tier a company and its lower-tier subsidiary fall within the definitions laid down in Article 2 and meet the requirements provided for in Article 3, up to the limit of the amount of the corresponding tax due.’

Following the amendments made by Directive 2014/86, Article 4(1)(a) of Directive 2011/96 is worded as follows:

‘…

(a) refrain from taxing such profits to the extent that such profits are not deductible by the subsidiary, and tax such profits to the extent that such profits are deductible by the subsidiary’.

Under Article 4(3) of Directive 2011/96:

‘Each Member State shall retain the option of providing that any charges relating to the holding and any losses resulting from the distribution of the profits of the subsidiary may not be deducted from the taxable profits of the parent company.

Where the management costs relating to the holding in such a case are fixed as a flat rate, the fixed amount may not exceed 5% of the profits distributed by the subsidiary.’

Part B of Annex I to Directive 2011/96, headed ‘List of taxes referred to in Article 2(a)(iii)’, sets out the following taxes:

‘…

–imposta sul reddito delle società in Italy,

…’

Italian law

Article 89 of decreto del Presidente della Repubblica n. 917 – Approvazione del testo unico delle imposte sui redditi (Presidential Decree No 917 approving the consolidated law on income tax) of 22 December 1986 (GURI No 302 of 31 December 1986, Ordinary supplement No 126; ‘the TUIR’) states:

‘…

…’

Article 2 of decreto legislativo n. 446 – Istituzione dell’imposta regionale sulle attività produttive, revisione degli scaglioni, delle aliquote e delle detrazioni dell’Irpef e istituzione di una addizionale regionale a tale imposta, nonché riordino della disciplina dei tributi locali (Legislative Decree No 446 introducing a regional tax on production activities, revising personal income tax brackets, rates and deductions, and introducing a regional supplement to that tax, as well as reorganising the provisions governing local taxation) of 15 December 1997 (GURI No 298 of 23 December 1997, Ordinary Supplement No 252; ‘Legislative Decree No 446/1997’) provides:

‘1. The condition for the application of the [IRAP] shall be the regular exercise of an independently run activity whose object is the production of or trade in goods or the provision of services. …’

Under Article 4 of that legislative decree:

‘The [IRAP] shall apply to the net value of production deriving from activity carried on within the region.

…’

Legislative Decree No 446/1997 was amended by legge n. 244 – Disposizioni per la formazione del bilancio annuale e pluriennale dello Stato (legge finanziaria 2008) (Law No 244 on provisions for drawing up the annual and multiannual State budget (2008 Finance Law)) of 24 December 2007 (GURI No 300 of 28 December 2007, Ordinary Supplement No 285) (‘Legislative Decree No 446/1997, as amended’). Article 6 of Legislative Decree No 446/1997, as amended, headed ‘Determination of the net value of production of banks and other financial entities and companies’, provides:

‘1. … the basis of assessment shall be determined by the algebraic sum of the following items in the income statement established in accordance with the standards …:

(a) intermediation margin, reduced by 50% of the dividends;

…’

The disputes in the main proceedings and the question referred for a preliminary ruling

In the tax years 2014 and 2015, Banca Mediolanum, a bank resident for tax purposes in Italy, and Mediolanum SpA, a subsidiary of Banca Mediolanum, which was also resident for tax purposes in Italy and was absorbed by Banca Mediolanum before the court proceedings giving rise to the present requests for a preliminary ruling were brought, held shares in several companies which had their tax residences in other Member States of the European Union.

Banca Mediolanum and Mediolanum received dividends from those subsidiaries and included them in the basis of assessment for the imposta sur reddito delle società (corporation tax; ‘IRES’), referred to in Part B of Annex I to Directive 2011/96, up to a maximum of 5% of their amount, in accordance with Article 89(2) of the TUIR.

Those companies, in their capacity as financial intermediaries, also included those dividends in the basis of assessment for IRAP, corresponding to 50% of their amount, pursuant to the provisions of Article 6(1)(a) of Legislative Decree No 446/1997, as amended.

Subsequently, Banca Mediolanum, claiming that that provision was contrary to Article 4 of Directive 2011/96, brought three applications before the tax authority seeking reimbursement of the proportion of IRAP resulting from the inclusion in the basis of assessment for that tax of amounts corresponding to 50% of the dividends received from subsidiaries resident in other Member States.

The tax authority rejected those applications on the ground that Article 6(1)(a) of Legislative Decree No 446/1997, as amended, is not contrary to Article 4 of Directive 2011/96, in so far as, in its view, that provision is intended to apply only to income tax, and not also to IRAP.

Banca Mediolanum brought actions against the rejection decisions of the tax authority before the Commissione tributaria provinciale di Milano (Provincial Tax Court, Milan, Italy), which delivered three judgments confirming those decisions.

Consequently, Banca Mediolanum brought an appeal against those judgments before the Corte di giustizia tributaria di secondo grado della Lombardia (Tax Court of Second Instance, Lombardy, Italy), which is the referring court.

That court, referring to Article 4 of Directive 2011/96 in the version prior to the amendment made by Directive 2014/86, takes the view that the prohibition, deriving from Article 4, on treating as taxable the profits distributed by a subsidiary resident in one Member State to a parent company resident in another Member State, in excess of 5% of their amount, could also be applied to IRAP.

In that regard, the referring court states that IRAP, in accordance with Articles 2 and 4 of Legislative Decree No 446/1997, by which that tax was introduced, first, has as a condition of its application the regular exercise of an independently run activity whose object is the production of or trade in goods or the provision of services and, second, applies to the net value of production deriving from the activity carried on in the territory of the Italian region concerned.

Nevertheless, the referring court takes the view that it follows from the judgments of 17 May 2017, AFEP and Others (C‑365/16, EU:C:2017:378), and of 17 May 2017, X (C‑68/15, EU:C:2017:379), that Article 4 of Directive 2011/96 prohibits Member States from subjecting dividends distributed to parent companies resident in a Member State by their subsidiaries resident in other Member States to any form of taxation that is levied on more than 5% of the amount of those dividends.

According to that court, if it were to be considered that IRAP is covered by that prohibition, Article 6(1)(a) of Legislative Decree No 446/1997, as amended, would be incompatible with Directive 2011/96, in so far as that provision requires banks and other financial intermediaries classified as parent companies within the meaning of that directive to subject to IRAP 50% of the dividends which those companies have received from companies resident in other Member States, classified as subsidiaries for the purposes of that directive.

In those circumstances, the Corte di giustizia tributaria di secondo grado della Lombardia (Tax Court of Second Instance, Lombardy) decided, in each of the appeal proceedings pending before it, to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Is the claim made by the Italian Republic, contained in Article 6(1) of Legislative Decree [No 446/1997, as amended], to subject to IRAP 50[%] of dividends received by financial intermediaries resident in Italy, which are classified as parent companies for the purposes of [Directive 2011/96], and distributed by companies resident in other Member States …, which are classified as subsidiaries within the meaning of that directive, without authorising the parent companies to deduct from IRAP the fraction of corporation tax relating to those profits paid by the subsidiaries, not incompatible with the prohibition on subjecting profits received by parent companies resident in one Member State from subsidiaries resident in other Member States to taxation at a percentage rate exceeding 5[%] of the amount referred to in Article 4 of that directive?’

Consideration of the question referred

According to settled case-law, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the referring court with an answer which will be of use to it and enable it to determine the case before it. To that end, the Court should, where necessary, reformulate the questions referred to it. It is for the Court to extract from all the information provided by the national court, in particular from the grounds of the order for reference, the points of EU law which require interpretation, having regard to the subject matter of the dispute (judgment of 30 April 2024, M.N. (EncroChat), C‑670/22, EU:C:2024:372, paragraph 78 and the case-law cited).

As regards the tax treatment of the profits distributed by a subsidiary to its parent company, except when the subsidiary is liquidated, Article 4(1) of Directive 2011/96 expressly leaves it open to Member States to choose between the system provided for in Article 4(1)(a) (‘the exemption system’) and the system provided for in Article 4(1)(b) (see, to that effect, judgment of 13 March 2025, John Cockerill, C‑135/24, EU:C:2025:176, paragraphs 27 and 28 and the case-law cited). Where a Member State has opted for one of those systems, the provision relating to the other system is not relevant (see, to that effect, judgments of 19 December 2019, Brussels Securities, C‑389/18, EU:C:2019:1132, paragraph 32, and of 12 May 2022, Schneider Electric and Others, C‑556/20, EU:C:2022:378, paragraph 63 and the case-law cited).

28Furthermore, Article 4(3) of Directive 2011/96 provides that the Member States are to retain the option of providing, in particular, that the charges relating to the holding of the parent company in the capital of the subsidiary may not be deducted from the taxable profits of the parent company. That provision also states that where the management costs relating to the holding in such a case are fixed as a flat rate, their amount may not exceed 5% of the profits distributed by the subsidiary (judgments of 17 May 2017, AFEP and Others, C‑365/16, EU:C:2017:378, paragraph 23, and of 17 May 2017, X, C‑68/15, EU:C:2017:379, paragraph 72).

29In the present case, it is apparent from the documents before the Court that the Italian Republic applies the exemption system. Nevertheless, in addition to providing for a tax levied on 5% of the amount of the dividends distributed to parent companies resident in Italy by their subsidiaries, by way of IRES, in accordance with Article 89(2) of the TUIR, the national legislation requires, in essence, that 50% of those dividends be included in the basis of assessment for another tax, namely IRAP, irrespective of the origin of those dividends.

30In those circumstances, it must be stated that, by its question, the referring court asks, in essence, whether Article 4 of Directive 2011/96 must be interpreted as precluding national legislation pursuant to which a Member State that has opted for the exemption system may levy tax on more than 5% of the amount of the dividends which the financial intermediaries resident in that Member State receive, as parent companies within the meaning of that directive, from their subsidiaries resident in other Member States, including where that is done by way of a tax which is not a tax on corporate income, but which includes in its basis of assessment those dividends or a fraction thereof.

31It must be borne in mind that, in accordance with settled case-law, first, in interpreting a provision of EU law, it is necessary to consider not only its wording, but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgments of 17 November 1983, Merck, 292/82, EU:C:1983:335, paragraph 12, and of 25 February 2025, BSH Hausgeräte, C‑339/22, EU:C:2025:108, paragraph 27). Second, an interpretation of a provision of EU law cannot have the result of depriving the clear and precise wording of that provision of all effectiveness. Thus, where the meaning of a provision of EU law is absolutely plain from its very wording, the Court cannot depart from that interpretation (judgments of 25 January 2022, VYSOČINA WIND, C‑181/20, EU:C:2022:51, paragraph 39, and of 13 October 2022, Gmina Wieliszew, C‑698/20, EU:C:2022:787, paragraph 83).

32In the first place, from a literal point of view, it is clear from the wording of Article 4(1)(a) of Directive 2011/96 that a Member State which has chosen the exemption system must refrain from taxing the profits which a parent company resident in that Member State receives from its subsidiaries resident in other Member States.

33In that regard, concerning the version of that provision resulting from the amendment introduced by Directive 2014/86, the Court has held that the application of that provision is not limited to a tax in particular (see, to that effect, judgment of 17 May 2017, AFEP and Others, C‑365/16, EU:C:2017:378, paragraphs 5 and 33). The Court made that finding also in relation to the first indent of Article 4(1) of Directive 90/435 (see, to that effect, judgment of 12 May 2022, Schneider Electric and Others, C‑556/20, EU:C:2022:378, paragraph 47), which corresponds to the version of Article 4(1)(a) of Directive 2011/96 referred to by the referring court and by all the parties in their written observations.

34The Court has thus ruled that Article 4(1)(a) of Directive 2011/96, as amended by Directive 2014/86, must be interpreted as precluding a tax measure of the Member State of residence of a parent company providing for the levy of a tax when the parent company distributes dividends and the basis of assessment of which tax is the amounts of the dividends distributed, including those coming from that company’s non-resident subsidiaries (judgment of 17 May 2017, AFEP and Others, C‑365/16, EU:C:2017:378, paragraph 35).

35Consequently, from a literal point of view, Article 4(1)(a) of Directive 2011/96 must be interpreted as meaning that the exemption system it provides for concerns any tax which includes in its basis of assessment the dividends a parent company receives from its subsidiaries which are resident in other Member States.

36In the second place, from a contextual point of view, it should be borne in mind that recital 4 of Directive 2003/123 amending Directive 90/435 – which Directive 2011/96 recast, as set out in its recital 1 – states that Article 2 of Directive 90/435 defines the companies falling within its scope and that the annex to that directive contains a list of companies to which that directive applies.

37In that regard, Article 2(a)(iii) of Directive 2011/96 and Part B of Annex I thereto list, in order to identify those companies in the Member States which are regarded as falling within the scope of that directive, the national taxes to which those companies are normally subject (see, by analogy, judgment of 8 June 2000, Epson Europe, C‑375/98, EU:C:2000:302, paragraph 22).

38Accordingly, contrary to what the Italian Government submits, although Article 2 of Directive 2011/96 defines the scope of that directive ratione personae, that article, by contrast, is not relevant in determining the scope ratione materiae of that directive. Therefore, the fact that IRAP is not included in the taxes set out in Part B of Annex I to that directive, to which Article 2(a)(iii) of that directive refers, does not mean that that tax is excluded from the material scope of that directive.

39In the third and last place, from a teleological point of view, as is apparent from recital 3 thereof, Directive 2011/96 pursues the objective of eliminating the double taxation of distributed profits paid by a subsidiary to its parent company at the level of the parent company.

40In addition, according to the case-law of the Court, in order to ensure the neutrality, from the tax point of view, of the distribution of profits by a subsidiary established in one Member State to its parent company established in another Member State, Directive 2011/96 aims to avoid, in particular, by the rule laid down in Article 4(1)(a) thereof, in economic terms, double taxation of profits, in other words, to avoid taxation of distributed profits, first, at the level of the subsidiary and, then, at the level of the parent company (see, to that effect and by analogy, judgment of 12 May 2022, Schneider Electric and Others, C‑556/20, EU:C:2022:378, paragraph 45; see, also, to that effect, judgment of 13 March 2025, John Cockerill, C‑135/24, EU:C:2025:176, paragraph 33).

41Therefore, in so far as that directive seeks to avoid double taxation of those profits ‘in economic terms’, it must be stated that the exemption system applies to any tax that, in the Member State of residence of the parent company, includes in its basis of assessment even a part of those profits, whatever the nature of that tax.

42In the present case, Legislative Decree No 446/1997, as amended, provides, in Article 6(1) thereof, that, as regards financial intermediaries, the basis of assessment for IRAP consists of the algebraic sum of several elements, including, in point (a) of that provision, the intermediation margin, reduced by 50% of the dividends.

43Since, as the Italian Government states, the intermediation margin includes all dividends, the effect of Article 6(1)(a) of Legislative Decree No 446/1997, as amended, is that 50% of the dividends are included in the basis of assessment for IRAP for which the financial intermediaries are liable, irrespective of the origin of those dividends.

44In those circumstances, it must be stated that the exemption system precludes national legislation that allows for dividends which a parent company receives from its subsidiaries resident in other Member States to be included in the basis of assessment for a tax, such as IRAP, in addition to the inclusion of 5% of the amount of those dividends in the basis of assessment for a corporation tax, such as IRES.

45Furthermore, in the light of the Italian Government’s argument that, in essence, the outcome referred to in the preceding paragraph may give rise to reverse discrimination to the detriment of a parent company resident in Italy which receives dividends from its Italian subsidiaries, in alleged breach of the principle of equal treatment, it must be noted that the situation thus referred to by that government is purely internal to the Italian Republic.

46According to the case-law, the principle of equal treatment enshrined in EU law cannot be relied on in a purely domestic situation. In such a situation, it is for the referring court to determine whether there is discrimination prohibited by national law and, where relevant, establish how that discrimination should be removed (order of 5 April 2004, Mosconi and Ordine degli Ingegneri di Verona e Provincia, C‑3/02, EU:C:2004:224, paragraph 53 and the case-law cited; see also, to that effect, judgment of 2 April 2020, PF and Others, C‑830/18, EU:C:2020:275, paragraph 35 and the case-law cited).

47In the light of the foregoing, the answer to the question referred for a preliminary ruling is that Article 4 of Directive 2011/96 must be interpreted as precluding national legislation pursuant to which a Member State that has opted for the exemption system may levy tax on more than 5% of the amount of the dividends which the financial intermediaries resident in that Member State receive, as parent companies within the meaning of that directive, from their subsidiaries resident in other Member States, including where that is done by way of a tax which is not a tax on corporate income, but which includes in its basis of assessment those dividends or a fraction thereof.

Costs

48Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

Article 4 of Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States

must be interpreted as precluding national legislation pursuant to which a Member State that has opted for the exemption system may levy tax on more than 5% of the amount of the dividends which the financial intermediaries resident in that Member State receive, as parent companies within the meaning of that directive, from their subsidiaries resident in other Member States, including where that is done by way of a tax which is not a tax on corporate income, but which includes in its basis of assessment those dividends or a fraction thereof.

[Signatures]

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Language of the case: Italian.