Although the judgment is still pending, tax advisors and investment structures across Europe are already watching the case closely. If the Court rules against Sweden, the decision could substantially broaden access to Swedish WHT refunds for loss-making corporate investors and investment funds.

The Advocate General’s Opinion is expected in mid-2026, with a final judgment likely later in the year.

Why This Case Matters

Sweden has already faced several challenges before the CJEU regarding its withholding tax regime. Most notably, the Court ruled in KEVA (C-39/23) that Sweden unlawfully taxed dividends paid to foreign public pension funds.

Case C-241/25 focuses on a different group of taxpayers: companies established in other EU Member States that received Swedish dividends while reporting tax losses in their home jurisdiction.

Under Swedish rules, domestic loss-making companies can generally offset dividend income against losses, meaning no effective tax is payable. Foreign companies, however, are subject to withholding tax at source, typically 30%, unless reduced under a tax treaty.

The dispute arises because Sweden requires foreign companies seeking a refund to prove not only that they were loss-making under their own domestic tax rules, but also that they would have been loss-making under Swedish tax rules. This is often referred to as the “dual-calculation requirement.”

For many investors, this means preparing a hypothetical Swedish tax computation years after the dividend was received.

The Core EU Law Question

The case centers on Article 63 of the Treaty on the Functioning of the European Union (TFEU), which protects the free movement of capital between Member States.

The Swedish Supreme Administrative Court asked the CJEU whether Sweden can lawfully impose this additional evidentiary burden on foreign companies before granting a WHT refund. In practical terms, the Court must determine whether Sweden’s requirements are proportionate, or whether they make the exercise of EU law rights excessively difficult. This proportionality analysis has become increasingly important in recent CJEU tax cases involving cross-border withholding taxes and evidentiary standards.

The Facts Behind the Case

The underlying dispute involves a French company that received dividends from Swedish portfolio investments in 2012. Swedish withholding tax was applied at the reduced treaty rate of 15% under the France–Sweden tax treaty.

The company argued that it was loss-making under French tax rules and would also have been loss-making under Swedish rules. On that basis, it claimed it was comparable to a Swedish resident company that would not have suffered effective taxation on the dividends.

However, the Swedish Tax Agency rejected the refund request because the company had not sufficiently demonstrated its position under Swedish tax rules. The matter ultimately reached Sweden’s Supreme Administrative Court, which referred the issue to the CJEU on 25 March 2025.

Existing CJEU Case Law May Support Investors

The CJEU has previously ruled that Member States cannot impose discriminatory withholding tax burdens on non-resident taxpayers in situations where comparable domestic taxpayers would not bear equivalent taxation.

Recently, the Court examined evidentiary standards in Case C-525/24 concerning Portuguese withholding tax procedures. The Court held that Member States may impose documentation requirements, but those requirements must not make refund claims “impossible or excessively difficult.”

That principle may prove highly relevant in C-241/25.

Which Investors Could Benefit?

If the CJEU rules against Sweden’s dual-calculation requirement, the implications could extend well beyond the specific French claimant.

Potentially affected investors may include:

EU Investment Funds

Corporate-form investment funds, such as Luxembourg SICAVs, Irish ICAVs, Dutch NVs, or Belgian investment companies, may have experienced loss-making years due to market volatility, hedging costs, or operational expenses.

Funds with Swedish equity exposure during those periods could potentially revisit historic WHT positions.

Holding Companies and Intermediate Vehicles

EU holding structures that received Swedish dividends while reporting tax losses may also benefit.

This could include companies affected by:

• financing costs,

• portfolio write-downs,

• intra-group charges, or

• broader group losses.

Potential Third-Country Implications

Article 63 TFEU also applies to certain capital movements involving non-EU jurisdictions. Depending on the Court’s reasoning, some non-EU investors may also attempt to challenge Sweden’s evidentiary requirements.

However, the primary focus of the case remains EU-resident entities.

Why Timing Matters

One of the most important practical points concerns Sweden’s limitation period for withholding tax refunds.

Swedish refund claims are generally subject to a five-year deadline. This means dividends paid in 2021 may become time-barred on 31 December 2026, potentially before the final CJEU judgment is issued.

As a result, advisors are already considering protective claims for affected years.

Investors should consider the following practical steps:

• review Swedish dividend income for 2021–2025;

• identify years with tax losses;

• prepare supporting documentation; and

• consider filing protective refund claims before limitation periods expire.

What Happens Next?

The next major milestone will be the Advocate General’s Opinion, expected in mid-2026. Although Advocate General opinions are not binding, they are often influential in shaping the Court’s final decision.

A final judgment is expected later in 2026.

Regardless of the outcome, Case C-241/25 already signals that Sweden’s withholding tax regime remains under significant EU law scrutiny. Combined with the earlier Keva developments, the case forms part of a broader reassessment of how non-resident investors are treated under Swedish tax law.

For tax professionals advising investment funds, holding structures, and institutional investors, the case is likely to remain a key development throughout 2026.