French General Tax Code
In force1. Income from transferable capital falling within the provisions of articles 118,119,238 septies B and 1678 bis give rise to the application of a withholding tax, the rate of which is set by 1 of Article 187, when they benefit persons who have their registered office in France or abroad or who do not have their tax domicile in France.
However, income from debt securities mentioned in the first paragraph of article 124 B are outside the scope of the withholding tax. The same applies to the redemption premium referred to in article 238 septies A.
Income from securities issued from 1 January 1987, as defined in articles 118,119 and 238 septies B, is placed outside the scope of the withholding tax.
2. The products referred to in articles 108 to 117 bis shall give rise to the application of a withholding tax at a rate set by article 187 when they benefit persons who do not have their tax domicile or registered office in France, other than undertakings for collective investment constituted on the basis of foreign law located in a Member State of the European Union or in another State or territory which has concluded an administrative assistance agreement with France with a view to combating tax fraud and tax evasion and which satisfy the following two conditions:
1° Raise capital from a certain number of investors with a view to investing it, in accordance with a defined investment policy, in the interests of those investors;
2° Have characteristics similar to those of undertakings for collective investment governed by French law falling under section 1, paragraphs 1,2,3,5 and 6 of sub-section 2, sub-section 3, or sub-section 4 of section 2 of Chapter IV of Title I of Book II of the Monetary and Financial Code.
The stipulations of the administrative assistance agreement referred to in the first paragraph of this 2 and their implementation must effectively enable the tax authorities to obtain from the authorities of the State in which the undertaking for collective investment constituted on the basis of a foreign law referred to in the same paragraph is located the information necessary to verify compliance by this undertaking with the conditions set out in 1° and 2°.
The withholding tax also applies when these products are paid outside France in a non-cooperative State or territory within the meaning of article 238-0 A of this code other than those mentioned in 2° of 2 bis of the same article 238-0 A.
However, the withholding tax does not apply to the sums referred to in the first paragraph of a of article 111.
The withholding tax does not apply to distributions from venture capital companies operating under the conditions provided for in article 1-1 of law no. 85-695 of 11 July 1985 as amended when:
a) the distribution falls within the provisions of 5 of article 39 terdecies ;
b) the beneficial owner is a legal entity that has its effective management headquarters in a State that has concluded a tax treaty with France that includes an administrative assistance clause for the application of domestic law ;
c) the distribution is included in profits declared in that State but benefits from a tax exemption.
The income mentioned in the first paragraph of this 2 distributed by companies mentioned in 3° nonies of article 208, by companies mentioned in I and in the first paragraph of II of article 208 C and, for the portion of income distributed to beneficiaries other than companies mentioned in 3° nonies of article 208 who hold them under the conditions mentioned in III bis of article 208 C, by companies mentioned in the same III bis, having their registered office in France, give rise to the application of a withholding tax at the rate provided for in 2° of l'article 219 bis when they are deducted from results exempted pursuant to article 208 C or 3° nonies of article 208 and when they benefit undertakings for collective investment under French law covered by section 1, paragraphs 1,2,3,5 and 6 of sub-section 2, sub-section 3, or sub-section 4 of section 2 of chapter IV of title I of book II of the monetary and financial code or to those constituted on the basis of a foreign law mentioned in the first paragraph and meeting the conditions set out in 1° and 2° of this 2.
The withholding tax mentioned in the penultimate paragraph of the present 2 is not in full discharge of income tax or corporation tax and does not give rise to restitution or deduction.
