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Home » Withholding tax, Withholding tax » Income from French sources subject to deduction at source in discharge of tax liability or to withholding tax

Income from French sources subject to deduction at source in discharge of tax liability or to withholding tax

Financial income

Income from variable-yield securities

A 25% withholding tax in discharge of income tax liability is levied on dividends and similar income distributed by French companies to persons not domiciled in France. The rate is 18% for dividend and similar income paid since 1 January 2008 to individuals having their tax domicile in an EU Member State, in Iceland or in Norway. The rate is also reduced, or the tax even suppressed altogether, under most international tax treaties.

The withholding tax is levied by the entity legally responsible for paying it, namely the last payer in France. However, European financial intermediaries may pay the withholding tax due on income distributed by listed French companies to their non-resident shareholders to the French State provided that they have concluded an agreement with the French tax administration and have been authorised by the entity legally responsible for paying the tax to make the appropriate returns and payments.

Income from fixed-income securities

Subject to the provisions of international tax treaties, income from fixed-income securities received by non-residents is subject to a mandatory withholding tax. The rate is generally 18%, though it may vary according to the issue date of the securities, the date on which the income is paid, how long the securities have been held and whether the subscription is anonymous or not.
The withholding tax does not apply to:

• income from loans contracted outside France by French legal entities or French mutual funds;

• income from debt securities traded on a regulated market and interest on bonds of French origin.

Capital gains on real property

Under most international tax treaties concluded by France, capital gains on the sale of real property are taxable in the country where the property is situated. Capital gains on the sale of a property in France by a taxpayer domiciled outside France are taxable in France.

Capital gains realized by non-residents are taxed in principle at a proportional 33,3% rate.

However, they are taxed at 16% where the tax is payable by individuals domiciled in an EU Member State, in Iceland or in Norway.

Profits from real property

Certain property profits made by individuals domiciled outside France are subject to a withholding tax of 50%.
They are:

• profits made by property dealers;

• profits made by persons on the sale of properties they have built or had built and of related property rights;

• profits made by persons who sell land divided into plots intended for development.

Capital gains on the disposal of shares deriving from substantial interests

Gains resulting from the disposal by individuals or legal entities that do not have their domicile or registered office in France of shares in French companies are taxed in the same way as for individuals who have their tax domicile in France, where the seller, his or her spouse and their descendants and ascendants hold, or have held at some point during the previous five years, directly or indirectly, shares representing more than 25% of the corporate profits of the company whose shares have been sold.
Where they are taxable in France, capital gains realized by non-residents are taxed at the 18% rate if the threshold for sales is crossed and the applicable withholding discharges income tax.

Source: French Tax Office

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Posted by on Aug 31 2010. Filed under Withholding tax, Withholding tax. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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