DIVIDENDS: CONDITIONS OF ALLOCATION OF THE TAX CREDIT ("AVOIR FISCAL") TO RESIDENTS OF SWITZERLAND
A resident company of Switzerland, which was originally set up as a limited partnership and later transformed into a partnership, is not a legal entity, according to Swiss law, and is not considered as an individual, according to a), 3 of Article 11 of the French-Swiss tax treaty, modified by the amendment dated December 3, 1969.
Therefore, this company holding more than 20% of the capital of the French distributing company cannot benefit from the "avoir fiscal" linked to the dividends which the French company pays to the latter, owing to the fact that it does not fulfil the condition of maximum holding of capital provided by b) 3 of Article 11 of the above-mentioned tax treaty (French High Court, May 6, 1996, no.154.217, 8e and 9e s. - s., SA Quartz d'Alsace).
This decision cancels that of the Administrative Court of Appeal of Nancy dated October 21, 1993, which had considered the involved company as an individual allowing it to benefit from the transfer of the tax credit despite its rate of holding in the French distributing company.
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The law about payment of dividends has remained substantially unchanged for thirty years.
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