France: Finance Bill 2020 – Major amendments approved by the French Senate


On 23 November 2019, the French Senate adopted major amendments aiming at amending the existing anti-dividend arbitrage provisions set forth in article 119 bis A of the French tax code.

The main impacts of these amended measures relate to

  • The taxation of dividend equivalent payments to non-French residents
    Under this measure, any payment in any form and by any means made by a person established or resident in France for the benefit of a person not established nor resident in France is deemed to be a distributed income subject to French withholding tax on dividends, that is 28% for legal entities and 12.8 % for individuals. This is applicable on payments made by certain financial instruments for example, temporary transfer of shares or rights, obligation to resell or return these shares or rights, or any agreement having an economic similar effect to the ownership of said shares or rights).
    The simplified procedure will not be available to the beneficial owners however a full or partial refund could be obtained under certain conditions.
  • The dividend withholding tax exemption under Double taxation treaties (DTT).
    Under the proposed measure, foreign investors being resident in a country having concluded a DTT with France that provides a dividend tax exemption or no application of withholding tax on dividends would no longer benefit from the benefit of the exemption at source (through the “simplified procedure”). This would impact the following countries: Bahrain, Egypt, Finland, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
    Residents of these DTT countries will still have the possibility to reclaim the full tax exemption through the standard refund procedure. Additional documentation will probably be required to prove the effective beneficial ownership and demonstrate the principle purpose of the transaction.

These amendments shall still be reviewed by the French National Assembly. If definitely adopted, they will be effective on 1 January 2020.

We will inform customers as soon as official confirmation becomes available.

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