France and Japan signed a new income tax treaty last March to replace the treaty of November 27, 1964. Its unusual provisions have been replaced for the most part by OECD model treaty provisions. The major innovation of the March 1995 treaty concerns dividends. On the one hand, the withholding tax rate will be reduced from 10% to 5% for companies which hold at least 15% of the stock or at least 15% of the voting power of the distributing company. On the other hand, there will be no more withholding tax on dividends distributed to companies considered as "qualified residents" which hold at least 15% of the stock or at least 15% of the voting power of the distributing company. Companies listed on the stock exchange as well as those who have 50% or more of their stock held directly or indirectly by the state or public entities or by individual residents of France or Japan are notably considered as "qualified residents". The new treaty which is being currently ratified by France should enter into force before the beginning of 1996.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought for your specific circumstances. For additional information contact Claire Acard on +33 (1) 55 61 10 10 or enter text search: "ARCHIBALD ANDERSEN Profile". The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar.