Tax Recovery, Disparity and the Free Movement of Capital in Subnational Autonomous Territories of EU Member States

This note examines the judgment of the Court of Justice of the European Union in Credit Suisse Securities (Europe) Ltd v. Provincial Council of Biscay (Case C-601/23), wherein it ruled that the denial of a recovery mechanism for withholding tax in respect of non-resident undertakings in loss-making years violates the free movement of capital under EU law. Despite identical nominal tax rates, the Court found that resident and non-resident undertakings were in objectively comparable situations and that the definitive nature of taxation for non-residents constituted an unjustified restriction. The judgment clarifies that fiscal autonomy at the subnational level, such as autonomous territories, must operate within the bounds of EU law and that territoriality cannot justify unequal outcomes.