ECJ Decision of 10 May 2012 in Santander Case: French Withholding Tax on Dividend Payments to Non-French Resident Investment Vehicles Is Not Compatible With EU Regulations

June 01, 2012
Domestic withholding tax imposed by EU Member States on dividend payments made to non-resident investment vehicles has been an ongoing issue for some time now, due to the argument that such taxes may restrict the free movement of capital within the EU. The European Court of Justice (ECJ) recently handed down a major decision regarding this matter, finding that the French withholding tax (WHT) levied on dividend payments by French-resident companies to non-resident investment vehicles is not compatible with EU law. This update examines the ECJ’s decision.