Fund managers get EU tax boost

UK fund managers could reclaim millions as a result of a challenge to French
withholding tax rules.

The advocate general of the European Court of Justice Leendert Geelhoed today
gave his opinion on the Denkavit case, which was a challenge to French rules on
withholding tax on dividends.

The AG said that the rules, which charged a withholding tax to foreign
parents on French dividends, but no tax to French parents receiving such
dividends, to be discriminatory.

In a note to clients today, KPMG said: ‘Assuming the Opinion is followed by
the ECJ (as we expect it to be) this is very positive news not only for
corporates which suffered French (or other) withholding tax costs prior to the
introduction of the Parent Subsidiary Directive but also more significantly for
pension and investment funds across the EU which suffer substantial
irrecoverable costs on portfolio investment income in France and other EU member

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