France: Definitive procedure for 12.8% withholding tax rate for non-resident individuals for securities held in CBF
Note: This Announcement, previously published on 11 May 2018 has been updated to clarify how the Form 5001 should be sent.
The French Tax Authorities (FTA) confirmed on 30 April 2018, their agreement to the application of the 12.8% withholding tax rate through a simplified procedure.
Clearstream Banking1’s temporary procedure, announced in A18051, becomes definitive.
On 23 April 2018, Clearstream Banking announced to its customers a temporary procedure for the application of the 12.8% tax rate to foreign resident individuals.
This temporary procedure was built based on the one proposed to the FTA by the French Banking Association (FBA) and on confirmations obtained from the FTA itself.
On 30 April 2018, the FTA released a letter addressed to the FBA in which they confirm the possibility to apply the 12.8% tax rate through a process of simplified procedure or through a standard refund if the relief at source deadline was not met.
Impact on customers
Relief at source and quick refund
For beneficial owners (BOs) wishing to obtain relief at source or quick refund the procedure described in the announcement A18051 remains applicable, with the exception of the validity of the proof of residency. Please refer to the below important note for further details.
For beneficial owners wishing to obtain standard refund on dividends paid as of 1 January 2018, the procedure is the following:
- A Letter of Request to Clearstream Banking for Reclaim of French Withholding Tax;
- A Proof of tax residency (form 5000 or Certificate of Residence(COR);
- A Form 5001 Calculation and Repayment of Withholding Tax on Dividends (must be printed on both sides but complete the details of page two only);
- A Power of Attorney, if applicable.
Deadline for reclaiming withholding tax
The statutory deadline for reclaiming withholding tax is two years after the end of the calendar year in which the dividend payment is made.
Important note on the validity of the proof of residency
Contrary to the information included in our temporary procedure, the FTA confirmed that the proof of residency used for the application of the 12.8% tax rate will be valid for three years whereas it remains valid for one year if used for the benefit of a Double Taxation Treaty rate.
Therefore, a form 5000 or a COR provided by a foreign individual for the application of the 12.8% tax rate in 2018 will be valid for the dividends paid in 2019 and 2020. The grace period until the 31 March is applicable to all types proof of residency.
As this validity was not known during the 2018 renewal period of the forms 5000, all renewed forms received from individual BOs until now have been given a validity of one year instead of three.
Clearstream Banking has taken the decision to consider by default the three years validity for all forms 5000 received since 1 January 2018, that is until 31 March 2021 with the obligation to be renewed in 2021 (unless there is a change of tax residency before that date).
However, foreign individuals who do not wish to apply for the 12.8% tax rate either because they can obtain a more favourable DTT rate or because their eligibility has changed or for any other reason should contact Clearstream Banking immediately for the forms already submitted in 2018 or instruct us with the new ones provided. In these cases, the validity will remain one year and the 12.8% tax rate will not apply.
For further information, customers may contact Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or their Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.