UK investment funds could land €20bn windfall after EU rules French tax 'discriminatory' The European Court of Justice (ECJ) declared the French tax was discriminatory, preparing the way for a tax rebate to UK investment funds of up to €5bn. France had levied a withholding tax of between 15pc and 25pc on dividends paid to foreign investors, while exempting local funds from the tax, a practice the ECJ said discriminated against international investors. Accountancy firm PricewaterhouseCoopers said the court verdict opened the way to similar judgments against other European countries with similar taxes, including Germany, the Netherlands and Belgium. Investment funds that may have paid this withholding tax any time over the past five years should investigate now as to whether they are able to claim rebates. Europe-wide these claims could amount to as much as €20bn, so it is in funds' interests to act now," said Teresa Owusu-Adjei, a tax partner at PwC. "The ultimate beneficiaries of this ruling against discrimination will be UK companies and employees saving for their retirement who will see improved returns on investments in Europe," she added. Sweden and Spain have already been forced by the European authorities to change their tax rules to end discriminatory withholding taxes on foreign funds. "UK pension and investment funds will no longer have to pay more tax on their dividends from investments in French companies than their French equivalents and in a difficult economic climate, funds will welcome any measure which allows them to maximise returns," said Ms Owusu-Adjei. Withholding taxes has been used a way to combat tax evasion, and imposing different requirements on individuals depending on where they are based is common.