France: Foreign UCITSs not liable to pay French dividend withholding tax : update II
| This Taxflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Taxflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Taxflash does not constitute legal or tax advice. |
Further to our Taxflash T12023, dated 14 June 2012, our French custodian has informed us unofficially that the French government might include in the framework of the coming Financial Amendment Bill for 2012 the proposal to abolish the withholding tax applied on French dividends paid to foreign UCITSs and foreign investment funds.
The exemption of withholding tax on French dividends paid to such institutions would be available under the following conditions:
- The fund should be constituted under a foreign law and located in an EU Member State or in a country or territory that has entered into a mutual administrative assistance agreement with France in order to fight fraud and tax avoidance; and
- The fund must fulfil the following conditions:
- It raises capital from a certain number of investors in order to invest such capital, in compliance with a determined investment policy in the interest of those investors; and
- It is governed according to operating and investment rules equivalent to those in place for the French UCITSs covered by paragraph 1, 5 or 6 of section 1 of article L-214-1 of the French Monetary and Financial Code.
- It raises capital from a certain number of investors in order to invest such capital, in compliance with a determined investment policy in the interest of those investors; and
Our French custodian has informed us that, in order to compensate the impact due to the repeal of this withholding tax, the French government might also propose a new contribution of 3% to be levied on income distributed by some eligible companies. According to our sources, this tax would be supported by distributing companies and not by the shareholders.
N.B.: This information is based on unofficial sources to our French custodian and customers should accordingly consider it with due prudence.
We will continue to monitor the situation and will provide more information about the implementation of the Financial Amendment Bill for 2012 as it becomes available.