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France: Domestic Corporate Taxation

Withholding Taxes on Incoming Dividends

As a member of the EU France is governed by the provisions of the EU's Parent-Subsidiary directive, whose effect is that where a French holding company controls at least 10% (reduced from 15% on January 1, 2009) of the shares of an EU subsidiary for a minimum period of 12 months any dividends remitted by the EU subsidiary to the French holding company are free of withholding taxes.

Where the provisions of this directive do not apply (or where anti-avoidance provisions are in place) French holding companies can rely on an extensive network of double taxation treaties the effect of which is to obtain a reduction in withholding tax rates on dividends remitted to France from the subsidiary jurisdiction.

France has over 110 double taxation treaties in place. The greater a country's network of double taxation treaties the greater its leverage to reduce withholding taxes on incoming dividends. An elaborate network of double taxation treaties is thus a key factor in the ability of a territory to develop as an attractive holding company jurisdiction.



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