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The European Court of Justice ruled in a judgement its decision concerning the compatibility of French dividend withholding tax with the EU principle of free movement of capital in Article 56 of the EC Treaty. A withholding tax was applied to dividends paid by French companies to foreign investment funds, whereas the same dividends paid to French funds were free of tax. This is a breach of the free movement of capital. Despite the fact that this judgement by the European Court of Justice (ECJ) only deals with the situation of ten Belgian, German, Spanish and American funds that filed a suit, this decision also applies to Luxembourg funds. It means that they are now at a level playing field with local French products. Laurent de La Mettrie is a Partner at PwC Luxembourg. He says that the...
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