France has concluded numerous tax treaties that eliminate double taxation on the worldwide income of resident taxpayers. If no tax treaty has been concluded, mitigation of double taxation can be achieved only through the principle of territorial taxation, which applies to companies liable to corporate tax.
Most treaties follow the model of the Organisation for Economic Co-operation and Development (OECD). For an overview of withholding taxes on dividends, interest and royalty payments that France is allowed to levy under various treaties, see table below. As noted in this table, certain withholding rates vary depending on whether the recipient has a substantial shareholding in the entity making the payment. Additional requirements may have to be met concerning the term of ownership of the shares. In some treaties, voting power is more decisive than the percentage of share capital held.
Different rates of withholding tax on royalties or interest may apply to different types of royalty and interest income. For example, the rates on industrial royalties and cultural royalties (copyrights) may vary, or interest on bank loans may be subject to a different rate from interest on other loans.
The rate of withholding tax on interest also depends on the date the bonds or securities were issued.
Tax Treaties
Treaty Withholding Tax Rates Recipient's Country Dividends Interest Royalties of Residence %(a) %(b) %(c) % Algeria 0 0 0/35(j) 33 1/3 Argentina 15 15 0/20 18 Australia 15 15 0/10 10 Austria 15 15 0 0/10 Belgium 15 0(i)/10(d) 0/15 0 Brazil 15 15 0/10/15 10/15/25 Cameroon 25 25 0/35(j) 15 Canada 15 10(d) 0/10 0/10 Central African Republic 25 25 0/35(j) 0 China 10 10 0/10 10 Cyprus 15 10(d) 0/10 0/5 Czechoslovakia (l) 10 10 0 0/5 Denmark 0 0 0 0 Finland 0/15 0/15 0/10 0 Gabon 15/25 15/25 0/35(j) 0/10 Germany 0/15 0(d)(i) 0 0 Greece 25 0(i)/25 0 5 Hungary 15 5(e) 0 0 Indonesia 15 10(e) 0/10/12/15 10 Ireland 15 0(i)/10(f) 0 0 Israel 15 10(f) 0/15 0/10 Italy 15 0(i)/15 0/10 0/5 Ivory Coast 25 25 0/35(j) 0/10 Japan 15 10(g) 0/10 10 Kuwait 0 5(h) 0 0 Lebanon 0 0 0 33 1/3 Luxembourg 15/25 0(i)/5/25(e) 0/10 0 Morocco 0/15 0/15 0/10/15 5/10 Netherlands 15 0(i)/5(e) 0/10 0 Norway 15 5(d) 0/10 0 Poland 15 5(d) 0 0/10 Portugal 15 0(i)/15 0/10 5 Romania 10 10 0/10 10 Saudi Arabia 0 5(h) 0/5 0 Singapore 15 10(d) 0/10 0/33 1/3 Spain 15 0(i)/10(e) 0/10 6 Sweden 0/15 0/15(e) 0 0 Switzerland 15 5/15(h) 0/10 5 Tunisia 25 25 0/12 5/15/20 United Kingdom 15 0(i)/5(d) 0 0 United States (k) 15 5(d) 0 0/5 USSR (m) 15 15 0/10 0 Yugoslavia (n) 15 5(e) 0 0(a) Rate if recipient does not have a substantial shareholding (as defined in the notes below).
(b) Rate if recipient has a substantial shareholding (as defined in the notes below).
(c) The various rates relate to various kinds of bonds or date of issuance.
(d) Substantial shareholding is defined as 10% or more.
(e) Substantial shareholding is defined as 25% or more.
(f) Substantial shareholding is defined as 50% or more.
(g) Substantial shareholding is defined as 15% or more.
(h) Substantial shareholding is defined as 20% or more.
(i) Exemption from withholding tax on dividends paid by French companies to parent companies located in other EU states holding at least 25% in the distributing company for an uninterrupted period of at least two years.
(j) 15% for interest accrued from 1 January 1995.
(k) A new tax treaty was signed on 31 August 1994.
(l) France honours the Czechoslovakia treaty with the Czech Republic and the Slovak Republic.
(m) France honours the USSR treaty with the republics of the Commonwealth of Independent States (CIS) and Georgia. The treaty does not apply to the Baltic States (Estonia, Latvia and Lithuania).
(n) France honours the Yugoslavia treaty with Bosnia-Herzegovina, Croatia, Macedonia and Slovenia.
The status of treaty applications with Serbia and Montenegro are uncertain.
In addition to the countries listed in the table of treaty withholding rates, France has tax treaties with the countries listed below.
Bangladesh Madagascar Pakistan Bahrain Malawi Philippines Benin Malaysia Saint Pierre & Miquelon Bulgaria Mali Senegal Burkina Faso Malta Sri Lanka Comoros Mauritania South Africa Congo Mauritius Thailand Ecuador Mayotte Togo Egypt Monaco Trinidad and Tobago Ghana New Zealand Turkey India New Caledonia United Arab Emirates Iceland Niger Venezuela Iran Nigeria Vietnam Jordan Oman Zambia Korea (South) QatarFrance also has tax treaties with the following nations concerning taxes other than income taxes.
Algeria (2,3) Israel (2,3) Quebec (1) Andorra (3) Italy (1,2,3) Romania (2,3) Argentina (1) Ivory Coast (2,3) Saarland (3) Austria (1,3) Japan (2) San Marino (3) Barhain (1) Jersey (3) Saudi Arabia (1,2) Belgium (2,3) Jordan (2) Senegal (2,3) Benin (2,3) Kuwait (1,2) Singapore (2) Bulgaria(2) Lebanon (2) Spain (1,2) Burkina Faso (2) Luxembourg (1,2,3) Sri Lanka (2) Cameroon (2,3) Madagascar (2,3) Sweden (2) Canada (1,3) Malaysia (2) Switzerland (1,2,3) Central African Republic (2) Mali (2,3) Thailand (2) China (2) Malta (1,2) Togo (2,3) Comoros (2) Mauritania (2,3) Trinidad & Tobago (2) Congo (2,3) Mauritius (1) Tunisia (2,3) Cyprus (2) Mexico (2) United Kingdom (2,3) Czechoslovakia (3) Morocco (2,3) United States (1,2,3) Denmark (1,3) Netherlands (1,3) Yugoslavia (3) Finland (1,2) Niger (2) Vietnam (1) Gabon (2,3) Nigeria (2) Germany (1,3) New Zealand (2) Greece (3) Norway (1,2,3) Hungary (1) Oman (2) Iceland (2) Philippines (2) India (1,2) Poland (2,3) Indonesia (1,2) Portugal (2) Ireland (2) Qatar(1)(1) Net worth taxes
(2) Estate taxes
(3) Social security taxes
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 Pierre Knoepfler on +33 (1) 46 93 70 00.
© Business Monitor 1995 Tel +44 171 820 7733.
