Withholding Tax on Cross-Border Dividends to EU and Non-EU Investment Funds Violates EU Law

In FIM Santander (C-338/11, May 10, 2012), the European Court of Justice (ECJ) held that the French withholding tax levied on dividends paid to EU and non-EU investment funds violates EU law. Under French domestic law, French-source dividends distributed to foreign investment funds are subject to a...

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Bibliographic Details
Published inJournal of International Taxation Vol. 23; no. 10; p. 16
Format Trade Publication Article
LanguageEnglish
Published Boston Thomson Reuters (Tax & Accounting) Inc 01.10.2012
Subjects
Court decisions
Dividend distributions
Foreign investment
Income taxes
International taxation
Investment companies
State court decisions
Tax refunds
Withholding taxes
United Kingdom > UK
Online AccessGet full text
ISSN1049-6378

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Summary:In FIM Santander (C-338/11, May 10, 2012), the European Court of Justice (ECJ) held that the French withholding tax levied on dividends paid to EU and non-EU investment funds violates EU law. Under French domestic law, French-source dividends distributed to foreign investment funds are subject to a 25% withholding tax, while French-source dividends distributed to a French undertaking for collective investment in transferable securities (UCITS) are not subject to withholding. The applicants in the case were EU and US investment funds. The French government had tried to argue that the ECJ should not compare the tax situation of these foreign investment funds with those of French UCITs, and that the court instead should consider the tax situation of the unit holders in the fund.
ISSN:1049-6378