• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 4/25/2014

EU - Refund opportunities for non-EU investment funds 

April 25: A judgment from the Court of Justice for the European Union is viewed as providing opportunities for refunds of withholding tax by certain non-EU investment funds.


The Court of Justice of the European Union (CJEU) earlier this month rendered a judgment in Emerging Markets Series of DFA Investment Trust Company, C-190/12 (10 April 2014), concluding that the free movement of capital precludes rules—such as applied in Poland—under which a tax exemption is not extended to outbound dividends paid to an investment fund established in a non-EU Member State, provided there is an obligation of mutual administrative assistance between the two countries which enables the national tax authorities to verify information provided by the investment fund.

The CJEU considered that the Polish rules constituted a restriction of the free movement of capital and clarified under which conditions such a restriction may be justified.

The CJEU distinguished between situations when a regulatory framework of mutual assistance exists between the EU Member State and the third country in question and when there is no such framework. In the former situation, the taxpayer is to be given an opportunity to provide the evidence that the taxpayer operates within a regulatory framework equivalent to that in the EU.

KPMG observation

Tax professionals in Europe believe that this judgment may be viewed as very positive for those non-EU resident investment funds willing to file withholding tax reclaims in EU Member States. Accordingly, non-EU resident investment funds would want to consider taking the next steps in this respect, especially when a bilateral tax convention or a mutual administrative assistance agreement exists between the country of investment and the country of the fund’s residence.

Read an April 2014 report [PDF 141 KB] prepared by the KPMG member firm in Luxembourg: CJEU opens the door to withholding tax refunds to non-EU investment funds

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