The Nancy Administrative Court of Appeal decided on February 23, 1995 that under article 182-B of the French Tax Code, the income paid by a debtor established in France to legal entities that do not have a fixed place of business in France can be subject to withholding tax only if the beneficiaries are themselves liable for French corporate tax. In effect, the role of the withholding tax is to guarantee the payment of a tax due to the French Treasury by persons (or legal entities) that do not have a fixed place of business in France. The withholding tax is thus applicable only to entities liable for French tax. If confirmed, this decision could be extended to the new version of article 182-B of the French Tax Code, as modified by the law of December 29, 1989.
In this respect, it should be noted that according to the new version of article 182 B, in order for the withholding tax to be applicable, the income must be paid by a debtor having an activity in France (in the previous version of this article, income was to be paid by a debtor established in France).
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