Politics & Regulation Tax & Legal

European Court rules against tax on foreign funds in France

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The European Court of Justice has ruled the French government is unable to levy a withholding tax on foreign investment funds investing in French companies.

Prior to today’s judgment (10 May 2012), under French corporate tax law, France levied a withholding tax of 15%, or in some cases 25%, on foreign investment funds investing in French companies while French investment funds were exempt.

The court considers that the French legislation at issue constitutes a restriction on the free movement of capital which is prohibited under EU law, according to a statement from the ECJ.

It explains: “The different treatment of