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French Non-Resident Tax Law Provisions Under Fire

The European Commission has asked France to comply with European Union procedural rules when it refunds to non-residents the tax deducted at source that was not due on dividends.

Non-resident taxpayers who have invested in companies established in France must provide proof of payment by the French paying agent of the amount deducted from dividends when they apply for reimbursement of the part not due. In the event of a complaint, non-residents are allowed less time to make their application, as their starting point is the point at which the amount is deducted on the distribution of the dividends. The starting point for resident taxpayers is the time the tax notice is received.

According to the European Court of Justice, the procedural provisions of an EU member state must not make it impossible or excessively difficult to repay tax levied contrary to European law. The Commission believes that the French rules give rise to disproportionate procedures contrary to the principles of equivalence and effectiveness on which the Court bases its case-law on the reimbursement of payments not due.

The Commission has asked that the French authorities amend the rules in question. The authorities have two months to notify the Commission of the measures taken. Failing this, the Commission may refer France to the Court of Justice.

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