France: New self-certification for EU Parent companies

21.07.2016

Effective

immediately

the French Tax Authorities (FTA) have published an updated model of self-certification to be used by qualified European Parent Companies (“EUPC”) to certify that they meet the conditions laid down by Article 119 ter of the French Tax code. This attestation is necessary in order to benefit from a withholding tax exemption on dividends paid by French Subsidiaries.

Background

EUPCs and permanent establishments of EUPCs when located in France or in another EU Member State may benefit from tax exemption on dividends distributed by their French Subsidiaries as long as they comply with the following conditions laid down in the Parent-Subsidiary Directive 2011/96/EU, transposed into French Law by the Article 119 ter of the French Tax Code:

  • It has held or has committed to hold a direct shareholding of at least 10% in the share capital of the French subsidiary for an uninterrupted period of minimum two years;
  • It has its place of effective management within a Member State of the EU;
  • It has a legal form endorsed by the Annex I, part A of the Parent-Subsidiary Directive 2011/96/EU of 30 November 2011.

Following the adoption of several tax measures through the article 29 of the Amending Finance Act for 2015, amending provisions of Article 119 ter of the French Tax code, the EU Parent-Subsidiary tax exemption regime has been extended to:

  • Parent companies established in a State being part of the European Economic Area (EEA) having concluded with France a convention on administrative assistance to fight against fraud and evasion (that is, Iceland, Liechtenstein and Norway)
  • Dividends from securities held through bare ownership. Securities held through bare ownership can be taken into account for the computation of the shareholding threshold of 10 %.

Both measures apply to fiscal years ending on or after 31 December 2015.

Impact on customers

The amended self-certification issued by the FTA via their website (“Bulletin Official des Finances Publiques-Impôts” “BOFIP”) takes into consideration the new tax measures adopted through article 29 of the Amending Finance Act for 2015.

This self-certification has to be issued for the relief at source or standard refund procedures. It replaces the self-certification available on page 1 of form 5001.

It is only available in French. A non official English version is attached below for your convenience. Please note that only the French version is accepted by the FTA.

Documentation to provide

Beneficial owners falling under this category of EUPC and wishing to benefit from the dividend withholding tax exemption according to the European Directive, have to submit the following tax documentation at the latest, five business days before the relevant dividend payment date, by 09:00 CET.

  • The French self-certification to be completed, signed and stamped by the eligible parent-company. The self-certification has to be issued on letter head of the company.
  • An original certificate of residence (form 5000) issued by the local tax authorities of the country in which the EUPC has its effective place of management. It has to be dated of the year of the dividend payment.
  • A corporate action instruction including the following details: account number, ISIN code, payment date, position breakdown mentioning “Parent company regime” including the nominal amounts and respective tax rates to be applied, details of beneficial owner.

Please note that relief at source or standard refund of withholding tax can also be obtained for beneficial owners that are EUPC through the Double Taxation Treaty (DTT) procedure according to the provisions stated in the relevant DTT between the country of residence of the parent company and France. The documentation requirement remains unchanged and is available in our Market Taxation Guide - France.

Commitment to hold the shares for a 2-year uninterrupted period

Please note that Clearstream does not offer any service as far as concerns this commitment and the below is for your information only. The EUPC should liaise directly with their own tax advisors for further details on this procedure.

The EUPC holding at least 10% of the shareholding but not complying with the 2-year uninterrupted holding period requirement may obtain the benefit of the exemption as long as they:

  • Make an undertaking to hold the 10% shareholding for an uninterrupted period of at least 2 years; and
  • Appoint a representative in France responsible for the payment of the withholding tax in case of failure to respect this undertaking

The undertaking and the appointment of a representative must be taken with the FTA and the French paying agent of the dividends before the first dividend payment date.

The undertaking has to be accompanied with the acknowledgement of the appointed representative of its responsibility to pay the withholding tax in case of failure to respect the undertaking.

These documents must be sent to the FTA at the following address:

Service des impôts des entreprises étrangères
10, rue du centre
TSA 20011
96465 NOISY-LE-GRAND CEDEX
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.