Germany could lose €5 billion from its budget after the European Union's top court ruled today that the country's tax regulations on foreign dividends broke the bloc's rules.
"The court holds that the German tax legislation restricts the free movement of capital," the European Court of Justice said in a statement. It set no time limit on Germany's liability for refunding investors.
A spokesperson for the German Finance Ministry said the court decision could hit the country's budget by up to €5 billion.
The case was brought by the Meilicke family from Germany who contested a domestic law that gave a tax credit on dividends paid by German companies but not on dividends from companies based elsewhere in the European Union.