Press Room

July 19, 2018

From France: France Adopts the Multilateral Instruments: 88 Tax Treaties to Change in the Future

Denis Fontaine-Besset at Andersen Tax & Legal in France, a member firm of Andersen Global


On July 5, 2018, French parliament adopted the multilateral agreement (MLI) that, according to BEPS workshop 15, shall allow a simultaneous inclusion in a large number of tax treaties of anti-avoidance provisions OECD recommendations. Considering that more than five countries already adopted the MLI, those modifications shall become effective as soon as each of the designated countries has ratified the MLI on their side.

Out of the 120 existing tax treaties, France designated 88 MLI countries, including all EU member states (except for Denmark along which the tax treaty is no longer in effect), the U.S., and the BRICS. Main reservations made by France concern tax transparent entities (article 3 of the MLI), dual resident companies (art. 4), method for avoidance of double taxation (art. 5), anti-abuse rules for permanent establishments located in third countries (art. 10) and application of tax agreement to restrict a party’s right to tax its own residents (art. 11). Reservations are also expressed regarding the provisions on mandatory arbitration namely in order to comply with French legislation on the prevalence of court decisions.

As offered in the MLI, France chose option B for the definition of auxiliary activities that do not constitute a permanent establishment.

French tax authorities said they will not publish official consolidated versions of the treaties with MLI modifications. The entry in force of the MLI shall occur following the end of a three-month period post ratification date. The identification of modified tax treaties as well as the application of modified treaties will require specific attention.