Zimbabwe Double Tax Treaty dated December 15, 1993

Major provisions:

France and Zimbabwe signed on December 15, 1993 an agreement to avoid double taxation relating to income tax, capital gains and wealth tax (gathered in a memorandum) similar, for the most part, to the OECD model.

The bill allowing the approval of this agreement was filed at the "Parlement", but this agreement will only come into force after the ratification by both states. The main provisions of this agreement are the following:

a) Notion of permanent establishment

A continuation or mounting site will only constitute a permanent establishment if its duration exceeds six months (instead of 12 months in the OECD model).

b) Dividends

The withholding tax will be ceiled in France at 15% of the gross amount of dividends and at 20% in Zimbabwe (rates uniformly decreased to 10% should the beneficiary be a parent company holding directly at least 25% of the capital of the distributing company).

The residents of Zimbabwe will be entitled to the reimbursement of the "precompte" paid in France by the distributing company, less the withholding tax.

c) Interests

The state of origin will be able to receive a withholding tax limited to 10% of the gross amount of interests (no withholding tax in case of public loans or loans guaranteed by the state).

d) Royalties

The withholding tax will be limited to 10%. The definition of royalties comprises remunerations paid for the use or franchise of use of an author's right on films or magnetic tapes for radio or television broadcasting as well as sums paid in return for technical, administrative, managing or consulting services rendered in the state where the debtor is resident.

e) Wealth

The principle of wealth tax in the state of residence will include an exception concerning contributions amounting to at least 25% in the capital of the companies and real estate goods (or shares of companies mainly working in the real estate field), the taxation of which is assigned to the state of establishment of the company or the state of location of the good.

f) Avoidance of double taxation

As far as incomes from Zimbabwe are concerned, double taxation will be avoided by charging on the French income tax a tax credit either equal, according to the case, to the amount of the source collected income tax or the amount of the French income tax corresponding to these incomes.

g) Non-discrimination

The rules of non-discrimination are similar to the OECD model. However, it is provided that a permanent establishment might be subjected, in addition to the usual taxation on its net income, to a 5% taxation of the same net income.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. For additional information contact Claire Acard on 33/(1)/55 61 10 10 or Lionel Benant on 33/ The members of Archibald Andersen Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar and the Lyon Bar.