France's high court has declared that Britain's Kingfisher paid the French government too much tax 10 years ago and is therefore allowed to book the credit in its company earnings.

Europe's largest home improvement retailer and B&Q-owner, Kingfisher, said its 2013-14 earnings will reflect an exceptional credit of £145m (€168m, $216m) after the decade-old French tax case was settled in its favour.

In 2003, Kingfisher paid a one-off tax charge to the French government when Kesa Electricals (now Darty) de-merged from the British group. Kingfisher recognised the charge in its 2003/4 financial year.

However, it quickly appealed the decision through the French courts and in 2009 was successful in obtaining a full cash refund of the tax paid plus repayment supplement. The French government subsequently decided to elevate the case to the Conseil d'Etat.

The ruling, however, does not impact the retailer's cash position as a full refund of the tax had been made in 2009 following a previous successful hearing. It does mean that the retailer is able to cite record the credit without the fear that £145m could be stripped in payments to the French government at a later date.

"However, (the Conseil d'Etat's) decision finally removes any uncertainty over the position and will therefore result in an exceptional credit of around £145mm being recognised in this year's earnings," the company said in a statement on Monday.

Stirring Up Dividend Speculation

The court ruling has stirred up speculation that Kingfisher could grant shareholders a chunky dividend next year. Chief Executive Ian Cheshire had previously stated that shareholder payment would not be considered until the French tax case was settled.

The group's stock was trading 0.72% higher at 12:17 am in London, while the benchmark FTSE 100 was trading 0.78% higher.

However, Kingfisher reported a 30% drop in group-wide profits for the first three months of 2013. First-quarter sales were down 4.2% while retail profits were below expectations, dropping 29.2% to £114m.

Like-for-like sales in the first week of April fell in excess of 15%.

The company cited weaker confidence among consumers in the UK, Ireland and France and extremely cold weather in March as reasons for the fall in profit.

Home-improvement rival Homebase and leading tile and wooden flooring retailer Topps Tiles also reported a sluggish demand for their products.

Kingfisher's top retail brands are B&Q, Castorama, Brico Depot and Screwfix. It also operates the Koctas brand, a 50% joint venture in Turkey with the Koc Group, and has a 21% interest in Hornbach, Germany's top large format do-it-yourself retailer.