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