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On 24 September 2015, the European Commission (“EC”) released a statement on infringement procedures against France in respect of refunds of Dividend Withholding Tax (“DWT”) on French dividends due to European investors.  The EC has asked France to comply with the procedural rules when it refunds DWT deducted at source to non-residents.


Claims for refunds of DWT under EU principles have been filed by many investors over the last number of number of years.  These DWT reclaims came about as a result of a number of important rulings by the European courts which held that it was an infringement of the EU principle of the “free movement of capital” to discriminate against non-resident.  The major cases in this area included Fokus Bank (2004), Denkavit (2006), Amurta (2007), Aberdeen (2009) and Santander (2012).

The ruling in these important case led a number of European countries to amend their DWT rules to remove the discriminatory treatment of non-residents.  France was one such country, with thousands of reclaims lodged with the French Tax Authorities.

French DWT Reclaim Provisions

Current French tax provisions require non-residents seeking a DWT refund to provide proof of payment by the French paying agent of the amount of DWT deducted.  In the event of a complaint, non-residents are allowed less time to make their application, as their starting point is the time when the amount is deducted on distribution of the dividends, whereas for taxpayers resident in France it is the time the tax notice is received.

The EC has stated that it believes that these provisions give rise to disproportionate procedures contrary to the principles of equivalence and effectiveness on which the Court of Justice of the EU (“CJEU”) bases its case-law regarding the reimbursement of payments not due (C-310/09, Accor SA).  According to the CJEU, the procedural provisions of a Member State must not make it impossible or excessively difficult to repay tax levied contrary to European Law.

The French authorities have been asked to amend these rules so that French residents and non-residents alike are treated the same.  The French authorities have only two months to notify the EC of the measures taken in order to correct this difference in treatment.  If measures are not taken, the EC may decide to refer France to the CJEU.

To learn more about EU DWT reclaims please contact Patrick McClafferty, Partner at Nexus Taxation – partrickmcclafferty@nexustaxation.com