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Case Study 3
NETHERLANDS
HOGE RAAD (SUPREME COURT)
CASE Number 28.638
Royal Dutch Shell
Luxembourg Co
Assignment of dividend coupon
X LtdUK resident
Beneficial ownership • determined on date dividend becomes
payable• not necessary to own underlying shares
Coupon holder (UK Ltd)• was beneficial owner of dividend• could freely dispose of coupon and/or
dividend• did not act as an agent in cashing the
coupon
The Royal Dutch Case
The Bank of Scotland case
Parent Bank
USA
France
UK
Sub
3 years dividend usufruct
dividend
Attribution of dividend to bank?
Issues• Who is Beneficial owner - US parent• Can transaction be treated as - loan from
UK Bank to US parent• Is price paid by UK bank = dividend before
withholding tax• Can UK bank receive avoir fiscal• Beneficial Ownership and abuse of law Principles
Court of Appeals of Paris• Beneficial owner - UK bank
Conseil d’Etat (29 December 2006)• UK bank - not beneficial owner • Followed re-characterization as loan