A recent decision of the European Court of Justice (ECJ) may give a chance to some non-EU investment funds to obtain a withholding tax refund. The ECJ decision in Emerging Markets Series of DFA Investment Trust Company, C-190/12 (10 April 2014), was that the EU principle of free movement of capital means that a member state cannot pass a regulation under which a tax exemption does not apply to outbound dividends paid to an investment fund established in a non-EU Member State, if there is an agreement for mutual administrative assistance between the EU member state and the non-EU country through which the tax administration can confirm details given to them by the investment fund.

The ECJ held that the Polish regulations amounted to a restriction of the principle of free movement of capital and set out the conditions under which such a restriction could be justified. The ECJ distinguished between a situation where an agreement for mutual assistance was in place between the EU Member State and the non-EU country and situations where there is no such agreement. If an agreement for mutual assistance is in place, the taxpayer is to be given a chance to provide evidence that the business is functioning within a framework similar to that operating in the EU.