"Italian Rules on the Taxation of Outbound Dividends Are Incompatible With EC Treaty Freedoms": Is the Commission Right?

On july 25 the European Commission issued formal request to Italy and five other E.U. Member States asking them to amend their tax legislation concerning outbound dividend payments to companies (see page 17 for the full Press Release). ltaly and the other five Member States tax outbound dividends more heavily than domestic dividends. The EC has issued a "reasoned opinion" under Article 226 of the EC Treaty, and given the six Member States two months to reply satisfactorily, or the Commission may refer the matter to the European Court of justice. This article focuses on the ltalian rules in light of this opinion.