France: Requirements to be met by German pension funds to benefit from DTT rate on French dividends

Following the entry into force on 1 January 2016 of the new protocol to the tax treaty between France and Germany, Clearstream Banking¹ would like to advise its customers of the modalities of application of the reduced withholding tax rate foreseen by the protocol with respect to French-sourced dividends paid to German pension funds.

Background

As per Article 17 of the new protocol, treaty provisions apply on French dividends paid as of 1 January 2016 to a pension fund or any other body incorporated in Germany fulfilling all of the following conditions:

The pension fund or other eligible body must:

• Be established exclusively to administer, finance and provide to individuals retirement pensions or other pensions and benefits for a previous dependent work;
• Not be subject to corporate tax in Germany;
• At the end of the preceding fiscal year, have more than 50% of their beneficiaries, members or participant individuals resident in Germany.

Impact on customers

To confirm their eligibility to the tax treaty reduced rate, German pension funds must duly fill in the Form 5000 (which can be found under Tax Forms to use - France) and complete its box VII by reporting:

• The exact percentage of their beneficiaries, members or participants that are individuals resident for tax purposes in Germany or mention in Box VII that more than 50% of their beneficiaries, members or participants are individual residents for tax purposes in Germany;
• Which fiscal year this percentage or certification relates to (i.e. the fiscal year preceding the dividend payment year for which the application of the tax treaty rate is claimed).

Failure to provide this information will result in the rejection of the Form 5000 and:

1. The application of the standard dividend withholding tax rate provided by the French tax legislation should this form have been provided in the context of a relief at source procedure; or
2. The rejection of the reclaim of withholding tax should this form have been provided in the context of a standard reclaim procedure.

Note: Form 5000 is only part of the requirements to benefit from a reduced tax rate. For further details, customers are invited to refer to the relief at source and/or reclaim procedures as described in the Market Taxation Guide - France.

Further information

For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.

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1. Clearstream Banking refers collectively to 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, and 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.