France Rules 3% Tax on Dividends Unconstitutional
On May 17, 2017 the ECJ ruled that the 3% tax on revenues distributed to shareholders is contrary to European law. Its opinion was that this additional tax is not compatible with articles 4 and 5 of the ‘Mother-daughter’ European directive n°2011/96/UE of November 30, 2011.
Under this directive, with the exception of Small and Medium-sized Enterprises and companies belonging to the same tax consolidation group, all companies had to pay a 3% tax on dividends distributed.
Subsequently, the French Constitutional Council ruled on October 6, 2017 that the additional contribution of 3% (Decision No. 2017-660 QPC) was unconstitutional.
Therefore, France will abolish this tax as of January 1, 2018. This repeal was included in the draft Finance Law for the year 2018, which has been submitted to the French National Assembly.
According to the latest estimates, the French State will reimburse approximately 10 billion euros over 4 years to companies that have paid this tax on dividends. However, it is up to the companies that have paid this tax to contact the Tax Administration for reimbursement.
In order to obtain a refund, any taxpayer who has paid this contribution must file a claim by December 31, 2017 for contributions paid in 2015 and before December 31, 2018 for those paid in 2016.
Nicolas Delabre
