Bringing you live news and features since 2006 

Refund of withholding tax paves way for EU investment fund reclaims

RELATED TOPICS​

Investment funds across the EU who are challenging unlawful application of withholding taxes levied on dividends can expect refunds of millions of euros following Norway’s decision to refund withholding taxes to a Luxembourg Sicav, according to PricewaterhouseCoopers.

In June 2009 the ECJ issued its final judgment in the Aberdeen Property Fininvest Alpha Oy case in favour of the taxpayer, ruling the application of withholding tax on dividends paid to non-resident investment funds, while exempting domestic investment funds, discriminatory and in breach of Articles 43 and 48 and Articles 56 and 58 of the EC Treaty.

This ruling has set the wheels in motion for victory for the tax payer in other cases where withholding tax on dividends has been levied, as demonstrated by this Luxembourg Sicav case.

Teresa Owusu-Adjei, UK asset management tax leader, PricewaterhouseCoopers, says: “The refund runs into tens of millions of Euros, plus interest for the Luxembourg Sicav which is a significant win for the fund.

“While the UK does not have a tax regime that applies withholding tax on dividends many investors in asset and pension funds in Europe will be pleased to hear the outcome of this case. The values to be reclaimed from unlawful application of a discriminatory nature are significant.

"The current economic climate is challenging, and reclaiming overpaid tax on funds will be most welcome to those investors who find they have been unlawfully treated.”

Other European countries such as France, Germany, Italy, Spain and Belgium apply withholding tax on dividends paid to funds, while exempting their domestic funds from such taxes.

This week’s settlement sets a precedent for other fund claimants to come forward with a case of unlawful treatment under EU Law.

Owusu-Adjei adds: “Both the Aberdeen ECJ ruling and this settlement with the Luxembourg Sicav will have a significant impact on the current withholding tax on dividends regimes applied in EU and EEA jurisdictions, ensuring a level playing field for all funds."

Latest News

BlackRock’s global ETP flows report for June finds a steady rise with USD128.1 billion added to global ETPs in June,..
Morningstar’s global ETF flows report for the first half of 2024 shows that actively managed ETFs have captured 25 per..
The surge in bitcoin ETF launches and funds flowing into the sector is transforming institutional investment in digital assets but..
LSEG Lipper’s latest research finds that the majority of actively managed funds and ETFs globally were not able to beat..

Related Articles

Chris Lo, Columbia Threadneedle
In a recent insight on India by Columbia Threadneedle Investments, the firm reports that the country’s economic reforms, which aim...
With an election on the horizon in the United States a group of ETFs is poised to capture investments on...
Robot worker
Qraft Technologies, based in South Korea, specialises in the use of AI in security selection and portfolio construction....
Andrea Busi, Directa SIM
Romain Thomas talks to Andrea Busi (pictured), CEO of Directa SIM, who explains why the online trading platform has just...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by