Press Room

July 29, 2016

From France: 3% Distribution Tax Claims Opportunities


Denis Fontaine-Besset - STC Partners, a Member Firm of Andersen Global

For those operating in France through French subsidiaries, there is an opportunity to avoid the 3% tax applied on distributions of profits out of France made in the last two years or in the future. The possibility to avoid the 3% tax is available to French companies:

  • operating in a foreign country through a permanent establishment that can benefit from a Double Taxation Treaty (DTT) with the adequate clauses; or
  • where the French distributing entity is 95% or more directly held by a EU Holding company; or
  • where the French company redistributes dividends received from 10% or more EU subsidiaries; or
  • where the French distributing entity is 95% or more directly held by a non-EU Holding company resident in a country linked to France by a DTT with the adequate non-discrimination clause – as this is the case for the US.

France – Luxembourg Double Tax Treaty Amendment

Attention to all with clients who have properties in France in French entities held by a Luxembourg entity. Starting in 2017, an amendment to the French-Luxembourg tax treaty will come into effect. The gains derived from the disposal of shares and other rights in a company, trust or any other entity with more than 50 percent of assets situated in France and held by a Luxembourg taxpayer, previously exempt from tax in France, shall be taxable there. This means that existing holding structures aiming at benefiting from this exemption on capital gains need to be revisited before the new treaty provisions come into effect on 1st January 2017. Please note that this was a very popular and widely used structuring.

Please reach out to Denis Fontaine-Besset at STC Partners if you are interested in pursuing one of these opportunities.