European Court Decision will enable investment funds to reclaim billions

European Court Decision will enable investment fu...

The European Court of Justice has ruled that EU member state funds can claim back, withholding tax levied

Also on

The European Court of Justice has opened the way for investment funds based outside the EU to reclaim € billions in withholding tax levied by EU governments in a landmark decision today. The decision follows a number of cases where the European Court has ruled that funds from one EU member state can claim back withholding tax levied in another member state. While the Court has previously implied this principle holds where the fund claiming is from a non-EU member state, this is the first time the Court has been asked to give a decisive ruling on the matter.

According to KPMG, claims have already been submitted for around €3 billion and today’s decision is likely to trigger further claims for several € billion more from investment funds outside the EU, primarily based in the USA and Canada.


Chris Morgan, head of tax policy at KPMG in the UK, commented: “This is a seismic decision which opens the gates for € billions of withholding tax levied by European Union member state governments to be returned to investment funds based outside the EU. We estimate around €3 billion of claims have already been made and today’s news is likely to prompt more investment funds to submit claims which, in our view, are likely to be several € billion more.”

The issue at the heart of today’s decision is, inter alia, the question of whether EU law precludes tax legislation under which dividends paid by companies established in one member state to an investment fund established in a non-member state cannot qualify for a tax exemption that applies in a domestic situation (Poland in this specific case). Details of the case are available in the European Court’s press release (PDF 117 KB) .

According to KPMG in the UK, although today’s decision relates to a case in Poland, the decision is applicable across the EU. 


Chris Morgan concluded: “The key point is that provided a double tax treaty with an exchange of information clause exists between the Investment fund’s state of residence and the relevant EU country, there can be no justification for discriminatory tax rules being applied. Investment funds that have withholding taxes levied on them by EU fiscal authorities may well find that today’s decision means that they can claim a refund. They will need specialist advice to submit a claim however as the process is complicated.”


- ENDS -


For further information please contact:

Margot Cowhig, KPMG Corporate Communications

T: 0207 694 4246

M: 07920 274856



KPMG Press Office: +44 (0) 207 694 8773


About KPMG

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

Connect with us


Request for proposal



KPMG’s new-look website

KPMG’s new-look website