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Le taxe? Ooh la la!

May 22, 2012

Summary

UK pension schemes may be able to reclaim tax paid to the French tax authorities following a recent decision by the European Court of Justice (ECJ).

Background

The French authorities levy a withholding tax, of between 15% and 25%, on dividends paid to approved investment funds that are not resident in France, whereas no such tax is levied on French residents.  In the case of Santander Asset Management SGIIC SA v Directeur des résidents à l’étranger et des services généraux and others the ECJ ruled that such discrimination amounted to a restriction on the free movement of capital and so contravened EU law.

Comment

While it is estimated that UK pension funds may be able to claim up to £500 million in tax as a result of this ruling, the case has now to return to the French courts for the decision to be implemented.  The windfall may not materialise any time soon, therefore.

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