Between 2024 and 2026, French, Italian and Spanish courts and tribunals have significantly tightened the application of beneficial ownership rules to cross-border dividend flows, drawing consistently on the CJEU's Danish-cases framework and the Parent–Subsidiary Directive's general anti-avoidance rule. Intermediate holding structures that lack genuine economic substance or that function primarily as conduits for payments to ultimate beneficiaries outside the European Union have faced denial of treaty and directive benefits in all three jurisdictions. International groups relying on established routing arrangements should treat this period's case law as a material signal to reassess their tax structuring before the next audit cycle.
The Regulatory and Judicial Architecture
Beneficial ownership has long operated at the intersection of domestic anti-avoidance rules, bilateral tax treaties and EU directives. The CJEU's 2019 Danish cases – N Luxembourg 1 and Danish beneficial owner – established that an entity lacks beneficial-owner status where it is contractually or commercially obliged to pass on income received, has no real discretion over its use, and serves primarily as a conduit. That framework has since been absorbed into national jurisprudence across the EU, and the three jurisdictions examined here illustrate how different procedural traditions are converging on a broadly consistent substantive test.
At the EU level, the CJEU's ruling in C-228/24 Nordcurrent Group (3 April 2025) added a further dimension: the Parent–Subsidiary Directive's anti-abuse rule extends to national participation exemption regimes, not only to the directive itself in its narrow sense. Crucially, the Court confirmed that abuse requires both an objective element (a non-genuine arrangement) and a subjective element (the main purpose, or one of the main purposes, of obtaining a tax advantage). This two-limb test now operates as a common ceiling across France, Italy and Spain, regardless of how each member state has implemented the directive domestically.
For groups engaged in active tax risk management, the implication is straightforward: satisfying the letter of domestic participation exemption rules is no longer sufficient where an arrangement meets the objective and subjective criteria identified in Nordcurrent Group.
France: Two Pivotal Decisions in November 2024
Conseil d'État, 8 November 2024 – Foncière Vélizy Rose (no. 471147)
In Foncière Vélizy Rose, the Conseil d'État denied beneficial-owner status to a Luxembourg company that received dividends from a French subsidiary and passed them on upstream. The court applied the CJEU Danish-cases framework directly, examining whether the Luxembourg vehicle had genuine economic discretion over the income or was contractually constrained to transmit it. Finding the latter, it upheld the reassessment and confirmed that French withholding tax relief under the applicable tax treaty and the Parent–Subsidiary Directive was unavailable.
This decision is notable because it represents the Conseil d'État's clearest post-Danish endorsement of the conduit analysis in a purely dividend context. The Luxembourg intermediary's lack of independent decision-making capacity – rather than its formal legal existence – was the determinative factor. Groups using Luxembourg holding layers to access the Franco-Luxembourg treaty or directive exemption should review whether their treasury and governance arrangements demonstrate genuine economic substance.
Conseil d'État, 29 November 2024 – Société Hellier du Verneuil (no. 469012)
Three weeks later, in Société Hellier du Verneuil, the Conseil d'État applied France's abus de droit doctrine to deny the parent–subsidiary dividend exemption on the basis that the structure had been designed primarily to obtain a tax advantage without corresponding economic rationale. This decision illustrates that France does not rely exclusively on the beneficial ownership concept: where the arrangement as a whole lacks genuine substance, the general anti-avoidance pathway under domestic law offers an independent route to reassessment.
The interaction between the beneficial ownership analysis and abus de droit is practically significant. A structure may survive the conduit test yet still be challenged on general anti-avoidance grounds if the subjective purpose element is present. Advisers supporting French tax audit defence work should assess both risks in parallel rather than treating them as alternatives.
For further analysis of French and cross-border anti-avoidance developments in the context of the Multilateral Instrument, see our dedicated discussion of the principal purpose test under the MLI, which addresses how the subjective element interacts with treaty-level anti-abuse provisions.
Italy: Cassazione Integrates Cash-Pooling into the Beneficial Ownership Analysis
Italy's Supreme Court (Corte di Cassazione), in order no. 32467 of 23 October 2025, denied beneficial-owner status to an EU intermediate holding that received dividends from an Italian source company. The court found that the US parent was the real beneficiary of the income flow, and that the EU intermediate lacked the economic autonomy necessary to qualify for directive or treaty protection.
What distinguishes Cassazione no. 32467/2025 from earlier Italian decisions is its treatment of cash-pooling arrangements. The court weighed the fact that the intermediate holding participated in a centralised cash-pooling structure controlled by the US parent as part of its assessment of whether the intermediate exercised genuine discretion over the dividends received. Where funds flow automatically into a pooling account under the parent's control, the court reasoned, the intermediate's nominal receipt of income does not establish beneficial ownership.
This analysis has direct relevance for any group that combines a holding structure with treasury centralisation. Transfer pricing documentation that demonstrates the arm's length nature of intercompany finance arrangements may not, on its own, address the beneficial ownership question: the issue is not whether the pricing is market-rate, but whether the intermediate retains meaningful economic control over the relevant income stream.
If your group operates Italian subsidiary structures with centralised treasury functions, Ferraz & Whitmore's team can help you evaluate the exposure identified in this decision. Please write to info@ferrazwhitmore.com or visit our contacts page to arrange a confidential discussion.
Spain: TEAC Resolution of March 2024 on EU Intermediaries with Non-EU Ultimate Beneficiaries
Spain's Central Economic-Administrative Tribunal (Tribunal Económico-Administrativo Central) issued a significant resolution on 20 March 2024 (RG 07921/2020), applying a beneficial ownership analysis to dividend payments routed through an EU intermediary whose ultimate beneficiary was established outside the EU. The TEAC found that the EU intermediary could not rely on directive or treaty protections where it was effectively transparent for the purposes of economic ownership and where the non-EU parent was identifiable as the entity for whose benefit the income was ultimately destined.
This resolution is particularly relevant to structures that were designed to exploit the internal market framework – treating the EU intermediary as a qualifying parent for directive purposes – while the economic reality places the benefit with a non-EU party. The TEAC's approach signals that Spanish tax authorities will look through such arrangements, consistent with the two-limb abuse test confirmed in Nordcurrent Group.
Groups with Spanish operating companies and EU holding vehicles owned by non-EU parents should assess whether their structures satisfy the genuine economic activity and genuine arrangement tests under both Spanish domestic anti-avoidance rules and the applicable tax treaty. Our tax disputes practice in Spain provides dedicated support for administrative and judicial proceedings arising from these challenges: see Ferraz & Whitmore's Spain tax disputes practice for further information.
Cross-Border Implications and Comparative Patterns
Read together, the French, Italian and Spanish decisions reveal several consistent patterns that transcend jurisdictional boundaries:
- Conduit analysis is now mainstream. All three jurisdictions apply a substance-over-form test that focuses on whether the intermediate entity has genuine discretion over income. Formal legal personality and domestic registration are necessary but not sufficient.
- Treasury and governance arrangements are scrutinised. The Italian decision's treatment of cash-pooling confirms that the beneficial ownership enquiry extends beyond the legal characterisation of dividend flows to the broader treasury and governance context. Similar logic would apply in France and Spain under their respective anti-avoidance rules.
- The non-EU dimension heightens risk. Where the ultimate beneficiary is outside the EU, all three jurisdictions – and the CJEU in Nordcurrent Group – treat the arrangement with heightened scepticism. The internal market justification for directive protection is absent, and treaty abuse analysis applies in full.
- Dual legal pathways exist. France's abus de droit doctrine and Spain's general anti-avoidance provision operate alongside the beneficial ownership concept, not instead of it. A structure may face challenge under either or both routes.
- Transfer pricing documentation does not resolve beneficial ownership. Groups that rely on arm's length pricing analyses to demonstrate substance should note that beneficial ownership is a distinct legal concept. Transfer pricing addresses the allocation of profits between related entities; beneficial ownership addresses whether the entity receiving the income has genuine economic control over it.
These convergent patterns mean that a group reassessing its tax treaty position in one of these jurisdictions should conduct a coordinated review across all relevant locations rather than addressing each on an isolated basis. Fragmented advice risks inconsistent conclusions that may themselves become a liability in an audit context.
Strategic Recommendations for International Groups
Given the case law developments reviewed above, international groups should consider the following steps as part of a proactive approach to tax risk management:
- Substantive review of intermediate holding entities. Assess whether each intermediate holding in France, Italy and Spain has a genuine physical presence, independent management and decision-making capacity, and a clear commercial rationale beyond tax optimisation.
- Treasury function mapping. Document the degree to which each entity exercises independent control over income flows, bearing in mind the Italian court's treatment of cash-pooling as a factor adverse to beneficial ownership claims.
- Alignment of transfer pricing policies with beneficial ownership analysis. While transfer pricing documentation serves a distinct purpose, inconsistencies between the two analyses can undermine the group's position in audit. Both should tell a coherent story about where economic substance resides.
- Principal purpose test assessment under the MLI. For structures that rely on treaty benefits, the principal purpose test adopted in many treaties following the Multilateral Instrument operates in parallel with the domestic beneficial ownership analysis. Groups should ensure that their treaty positions survive scrutiny under both.
- Horizon-scanning for pending national developments. In each of the three jurisdictions, further guidance from tax authorities or legislative clarification on the implementation of the Nordcurrent Group principles is anticipated. Groups should monitor these developments as they arise.
Where litigation or arbitration arises from a beneficial ownership dispute spanning multiple jurisdictions, coordinated representation is often more effective than separate national mandates. Our litigation and arbitration practice supports cross-border dispute resolution in precisely these circumstances.
Outlook to 2026 and Beyond
The trajectory established by the decisions reviewed here is unlikely to reverse. The CJEU's Nordcurrent Group ruling in April 2025 provides a solid EU-law foundation for national courts to continue tightening beneficial ownership analysis, and national tax authorities in France, Italy and Spain have demonstrated both the appetite and the analytical tools to bring such challenges. Anti-avoidance rules are being applied with increasing granularity, and the bar for demonstrating genuine economic substance continues to rise.
At the same time, the law remains open in several respects. The precise weight to be given to cash-pooling features beyond the Italian context, the interaction between treaty beneficial ownership tests and the EU anti-abuse rule in mixed EU/non-EU structures, and the procedural standards governing evidence of substance are all areas where further guidance is expected. Groups facing or anticipating audit exposure should engage specialist advice now rather than waiting for final administrative guidance that may crystallise the law in a less favourable direction.
Ferraz & Whitmore's cross-border tax and litigation teams have experience advising on beneficial ownership disputes and related anti-avoidance challenges across European jurisdictions. To discuss your group's specific position, please contact us at info@ferrazwhitmore.com or through our contacts page.
Sources
- PwC Avocats – Withholding Tax on Dividends: Application of the European and Treaty Notion of Beneficial Owner: pwcavocats.com
- Forvis Mazars – Abus de droit fiscal et régime des sociétés mères: forvismazars.com
- EY Global Tax Alert – Italian Supreme Court Assesses Beneficial Ownership Status in Cross-Border Dividends Case Involving Cash Pooling: ey.com
- TPcases – Beneficial Owner Digest: tpcases.com
- Loyens & Loeff – CJEU Rules on the Application of the GAAR under the PSD to National Participation Exemptions: loyensloeff.com
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.