Under the relevant French tax rules in force until 2012,
individual shareholders domiciled for tax purposes in France could
benefit from a 40 percent tax basis relief on the amount of
dividends subject to the progressive tax scale of French personal
income tax (up to 45 percent), unless they had elected to pay a 21
percent final withholding tax provided for under Article 117
quater of the French Tax Code
On April 10, 2015, the Conseil d'Etat requested from
the Conseil constitutionnel a QPC on the conformity of
these provisions to the French Constitution. The taxpayers that
raised the issue of constitutionality argued that these provisions,
which deprived French taxpayers of the 40 percent tax basis relief
in the presence of a partial election to the final withholding tax
regime, created a breach of equality between taxpayers.
Interestingly, the Administrative Tribunal and Court of Appeal of
Paris both had not granted the taxpayers' request to refer the
QPC to the Conseil constitutionnel.
Please note that as from 2012, the 21 percent withholding tax is
no longer a payment in full discharge of all the tax that may
potentially be due on the dividend income; rather, it corresponds
to a down payment of personal income tax. The 40 percent tax relief
on the amount of dividends received has been maintained.
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.
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