The High Court has ruled that the UK's double tax relief system infringes European law, where dividends have been paid to the UK from EU-based companies in which the UK shareholder owned more than 10%. This means that the UK is not entitled to charge tax on EU-based companies and groups that have suffered from such tax liabilities may now be able to seek refunds. These rights do not extend to dividends from countries outside the EU. Bill Dodwell, tax partner at Deloitte, said: 'The cost to the Exchequer of this aspect of the judgment is likely to be relatively modest though. It is thought that actual UK tax paid on all overseas dividends is no more than £100m a year and the majority of dividends on which tax has been paid are likely to have come from outside the EU.' 'Interest will, of course, be due on repayments.' The judge also held that attempts to limit direct tax claims to the last six years contravened European law.Dodwell added: 'Inevitably the judgment will be appealed.'