The French Supreme Administrative Court on 13 February 2009 held that the withholding tax due by EU pension funds levied on French dividend payments is contrary to the free movement of capital guaranteed by the EC Treaty.
Under French law, domestic pension funds are considered as nonprofit organisations for tax purposes and are exempt from tax on dividends received from French companies. Foreign funds are subject to withholding tax on the same income. The Supreme Court stated that the restriction could not be justified either by the assertion that only domestic pension funds are serving the French general interest or by the need for fiscal coherence.
This should have implications for other EU pension funds, where they are able to show that they are in a position akin to French caisses de retraite (pension funds).