Sacrebleu! UK funds eye €5bn windfall after ruling against French

France had been levying the tax, which ranges from 15% to 25%, on the payments to funds domiciled outside the country, but payments to French funds were exempt from the tax reports citywire.

European Union and US-based investors argued that the French rules were discriminatory under EU law, and won their case at the ECJ.

UK funds may now be able to claim rebates of up to €5 billion, according to PricewaterhouseCoopers, while across Europe rebates of €20 billion could be due.

Kit Dickson, UK Financial Services tax partner at Deloitte, said: ‘The decision is good news for institutional investors and savers, not just in the EU but also elsewhere.’

‘It is bad news for France, against which claims of over €4 billion have already been made, and potentially other EU member states that have similar tax rules.’

However, France could still levy the tax on the payments if it decides to apply it equally to payments made to French funds.

Dickson pointed to a similar case involving pension funds where France applied the tax across the board.

‘When they had this issue on pensions funds in France a couple years ago they decided to start taxing a French pension fund,’ he said.

‘So what they could do is say start to apply a tax on a French investment fund going forward, or they could say we could apply an exception to everybody. What they need to do is applying equal treatment to the French and non-resident.’