Abstract The purpose of this thesis has been to investigate if the Swedish legislation concerning taxation of dividends to foreign investment funds is in violation to EU law. Furthermore, the thesis will analyze if the Fondskatteutredningens suggestions to changes in the current legislation is appropriate to the purpose it tries to obtain. Today there is a difference in the taxation of dividends paid to Swedish investment funds and foreign investment funds. Dividends paid to foreign investment funds is being taxed in accordance with the Coupon Tax Act (1970:624), in which no deduction of the tax is possible. Swedish investment funds on the other hand have the possibility to deduct as much of the received dividends that they have given in dividends to its shareholders. The difference in the taxation between investment funds because of origin has been reviewed by both Swedish court and by the European Court of Justice. It has in these cases been up to the courts to review if a difference in taxation of dividends could constitute a violation of the free movement. Even if a national legislation would be considered to be in violation of the free movement there are however developed justifying obstacles to the free movement. These obstacles are being analyzed in the thesis to see if the difference in the Swedish taxation can be justified. Within the EU the UCITS-directive regulates investment funds. Since the directive is being changed and will come in to force during 2011 the Fondskatteutredningen was presented in 2009 which presents suggestions to changes in the Swedish legislation concerning taxation of dividends to investment funds. These new changes may constitute that the Swedish legislation no longer will be in violation of EU law.