🇫🇷 France — 🇩🇪 Germany

Tax Treaty / Double Tax Avoidance Agreement detail

The France–Germany tax treaty was originally signed on 21 July 1959 and has been substantially amended on multiple occasions, with significant protocols concluded in 1969, 1989, and 2001. The most recent amending protocol was signed in 2015 and entered into force on 1 January 2016, bringing the treaty fully in line with modern OECD standards and the BEPS framework. The treaty allocates taxing rights across all categories of income including dividends, interest, royalties, business profits, capital gains, employment income, pensions, and real-property income. Dividends paid between the two countries attract a 15% withholding rate at the standard level, reduced to 5% where the beneficial owner is a company holding at least 10% of the paying company's capital; however, the EU Parent-Subsidiary Directive (2011/96/EU) effectively eliminates withholding on qualifying inter-corporate dividends where the parent holds at least 10% for a minimum 12-month holding period. Interest and royalties exchanged between associated enterprises are likewise fully exempt under the EU Interest and Royalties Directive (2003/49/EC), making the treaty rates largely academic for intra-group flows. A notable cross-border worker (frontaliers) regime applies to French residents who commute to work in Germany within a defined border zone: under Article 13 of the treaty their employment income is taxed exclusively in France, the state of residence, rather than in Germany as the state of source. Both France and Germany have signed and ratified the OECD Multilateral Instrument (MLI), with their bilateral treaty covered; the principal-purpose test (PPT) now applies as the primary anti-avoidance standard, and a mandatory binding arbitration clause is in force for unresolved mutual-agreement cases. A separate bilateral inheritance and gift tax treaty dating to 1934 (updated 1969) operates alongside the income treaty. Social security coordination is governed entirely by EU Regulation 883/2004, which supersedes any older bilateral social-security agreement and ensures that workers moving between the two countries are subject to only one member state's social security system at a time, with aggregation of contribution periods for pension entitlement.