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French supreme court acts on pensions rebates (amended)

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  • French supreme court acts on pensions rebates (amended)

NETHERLANDS - Dutch pension funds are set to receive a dividend tax refund from the French tax office, matching a similar ruling issued in the Netherlands for European schemes last month.

The payment of foreign dividend tax rebates for Dutch pension funds has come a step closer after a ruling by the Conseil d'Etat, the French supreme court, on February 13.

The case was heard after a legal challenge by Pensioenfonds Zorg en Welzijn (PFZW), the second-largest Dutch pension fund, which argued foreign pension funds are fiscally treated worse in many EU countries than local pension funds.

PFZW told IPE it is currently prosecuting in around 10 other countries as well together with a small number of other Dutch pension funds.

"According to guidelines of the French government, foreign pension funds, in contrast to French pension funds, are not entitled to a refund of withholding tax to invest in French companies," said PFZW.

The Conseil d'Etat decided the administrative guidelines are in conflict with the EU Treaty, giving the French government three months to draft new directives which are not in conflict with the EU Treaty.

PFZW was represented in this case by law firm Loyens & Loeff.

Earlier this year, the Dutch tax authorities issued a ruling which is likely to lead to the refund of over €100m to UK pension funds, according to KPMG, in a test case pursued on behalf of a number of UK pension funds and led by the Scottish scheme. (See earlier IPE story Pension funds set to receive €500m in Dutch tax rebates)

The ruling essentially stated Dutch tax authorities should not have levied a withholding tax on dividend payments to tax-exempt bodies, such as UK pension funds, which are located within the European Union but based outside the Netherlands.

KPMG said at that time the ruling also has implications for similar tax-exempt bodies in other EU member states who had paid Dutch withholding taxes in recent years, and estimated the total cost to the Dutch Revenue could be in the order of €500m.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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