France loses EUR 4.5 bn tax case on investment funds
Photo © Lee Torrens - Fotolia
(LUXEMBOURG) - The European Court of Justice ruled against France on Thursday over discriminatory tax treatment of foreign investment funds that one paper says could cost Paris 4.5 billion euros.
Foreign investment funds must pay withholding tax of 25 on dividends from investments in securities in French companies, while similar French-based investment funds are exempt.
The court said the French tax provisions "constitutes a restriction on the free movement of capital, in principle prohibited by" European treaties.
It added that there was no valid argument for the differential treatment of foreign and resident investors.
According to the French business daily Les Echos the decision could cost the French state some 4.5 billion euros ($5.8 billion) in reimbursements of withholding taxes already paid according to estimations provided by Paris to the court.
French finance ministry officials declined to confirm the 4.5 billion euro figure, and said they were studying changes to the tax laws to make up for the lost revenue from the decision they estimated at 800 million euros per year.