France and Vietnam signed a Tax Treaty on 10 February 1993, which has taken effect as from 1 July 1994. This Treaty mainly follows the OECD Model Tax Convention on Income and on Capital but contains certain specific provisions.
Article 4 (a) specifies that the term "resident of a Contracting State" includes, if the Contracting State is France, partnerships and other bodies of persons having their place of effective management in France and of which the associates or members are personally liable for tax on their share of profit under domestic French law. As for dividends, the Treaty does not grant the transfer of the attached tax credit (avoir fiscal), but Article 10-3 provides that a resident of Vietnam who receives dividends paid by a French company may obtain the refund of the prepayment (pr‚compte) relating to such dividends. No specific provision applies to interest which is therefore treated as "other income" under Article 20 of the Treaty (taxable only in the State of residence of the beneficial owner). Nonetheless, Article 4 (a) of the protocol specifies that if, by reason of a special relationship existing between the payer and the beneficial owner, the amount of interest which is paid exceeds the amount which would have been agreed upon in the absence of such a relationship, the provisions of Article 20 apply only to the last mentioned amount.
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. The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar.
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