Article 6 of the amended 2012 Finance Act of 16 August 2012 repealed the withholding tax provided for in Article 119 bis (2) of the French tax law concerning dividends distributed to an undertaking for collective investment (UCI or “OPC” in French) when located either in EU Member States or in a country or territory having concluded an agreement for administrative assistance to combat tax fraud and evasion, provided that the undertaking for collective investment satisfies both of the following conditions:
- The undertaking for collective investment raises capital from a certain number of investors with a goal of investing the capital, under a defined investment policy, in the interest of those investors.
- The undertaking has characteristics similar to the French undertaking for collective investment (OPCs) as expressly described in Article 119 bis (2) (notably OPCVMs, SICAFs, OPCIs).
A withholding tax (limited to 15%) is also provided for distributions that are drawn from the exempt income realized by certain entities—SIICs, SPPICAVs or subsidiaries of SIICs, or SPPICAVs—in favor of French and foreign undertakings for collective investment that also satisfy the same conditions.
Tax administration’s comments
Further to the transposition of an EU directive (Directive 2011/61/EU of 8 June 2011 (the “AIFM Directive”)) into French law, the French tax administration on 25 July 2013 published its comments on these provisions—thereby setting the state for the method to be used in conducting the comparability test.
The French comments indicate that:
- Undertakings for collective investment (or OPCs) located in EU Member States would fairly easily realize the immediate benefit of the 0% or 15% withholding tax from their French paying agent (i.e., the financial institution paying the dividends on the OPC’s account) through some filings.
- Undertakings for collective investment located outside the EU would apparently not be allowed the same benefit from the paying agent but would need to file a claim and provide the tax authorities with appropriate documentation evidencing that they are comparable to French OPCs.
Read an August 2013 report [PDF 190 KB] prepared by Fidal Direction Internationale.
For more information, contact a tax professional at Fidal Direction Internationale* in Paris or with KPMG’s France Tax Center in New York:
Gilles Galinier-Warrain, French Tax Center, KPMG LLP, New York
Laurent Leclercq, Tax Partner
+33 (0)1 55 68 16 42
Yves Robert, Tax Partner
+33 (0)1 55 68 15 76
Séverine Lauratet, Senior Manager
+33 (0)1 55 68 16 25
*Fidal Direction Internationale is a French law firm that is independent from KPMG and its member firms.