French General Tax Code
In forceI a. Where the beneficiaries of the income from movable capital referred to in articles 108 to 119,238 septies Band 1678 bis are required, under the provisions of the tax legislation, to submit, for the purposes of income tax, a return including the said income, the sum to which the said income has given rise, by virtue of the articles 119 bis and 1678 bis, is deducted from the amount of income tax settled on the basis of this return under the conditions set out in article 193.
For all taxpayers, whether or not they are required to file a tax return for income tax purposes, the sums withheld at source will be refunded, insofar as they cannot be set off against the income tax due to their lower amount or their non-eligibility under conditions that are set by decree in the Conseil d'Etat. These provisions do not apply to the withholding tax levied on interest on bonds issued as from 1st October 1984 which benefit persons who have their tax domicile or who are established outside the territory of the French Republic, Monaco or a State whose issuing institution is linked to the French Treasury by a monetary transaction account.
b. With regard to foreign source income referred to in articles 120 to 125, the deduction is limited to the amount of the credit corresponding to the tax withheld at source abroad or to the discount in lieu thereof, as provided for by international conventions.
c. The withholding tax, temporarily levied by Luxembourg and Austria in accordance with Article 11 of Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, gives entitlement after deduction, where applicable, other deductions at source and tax credits mentioned in a and b, to a tax credit equal to this deduction which is deducted from the income tax due in respect of the year during which the income defined in the seventh paragraph of 1 of article 242 ter, plus the amount of withholding tax to which they have been subject, are declared and taxed. Any excess is refunded.
I bis (Repealed).
II. Shareholders of investment companies or similar companies referred to in 1° bis and 1° bis A of article 208 and the venture capital companies referred to in 3° septies of the same article may offset all or part of the tax credits attached to the income and capital gains from the disposal of the portfolio of these companies under the same conditions as if they had received this income directly.
For each financial year, the company calculates the total sum to which the income received and the capital gains realised by it give entitlement.
The entitlement to deduction of each shareholder is determined in proportion to his share in the dividends and capital gains distributed in respect of the same financial year. For dividends, it may not exceed that normally attached to income distributed by ordinary French companies.
The amount to be imputed is added for income tax purposes to the net income received by the shareholder.
When investment companies eligible for the regime provided for in 1° bis and 1° bis A of Article 208 are unable to transfer to their shareholders all or part of the tax credits attached to the income received from their portfolio and the capital gains realised during a financial year, the unused credits may be carried forward to subsequent financial years.
III (Repealed).
