French tax administration releases new guidelines for dividend withholding tax exemption at source and refund procedures for foreign collective investment vehicles (“CIV’s”). In 2012, the European Court of Justice (“ECJ”) ruled that France’s withholding tax on dividends levied from foreign CIV’s was discriminatory and restriction of the free movement of capital that is prohibited by article 63 of the EU Treaty.

Following this judgment, France has started to refund withholding taxes to foreign CIV’s (both EU and non-EU based CIV’s) that applied for refund, provided that they are “objectively comparable” (within the meaning established by the ECJ in its case law) with French CIV’s.

Objective comparability is crucial, since without it there is no discrimination and therefore no right to be treated as favorable as French CIV’s which are exempt from dividend withholding tax. Among other things, the new guidelines provide guidance on how to determine whether a foreign CIV is objectively comparable to a French CIV and therefor eligible for refund or exemption at source, and which procedures to follow for exemption at source.