🇺🇸 United States — 🇫🇷 France

Tax Treaty / Double Tax Avoidance Agreement detail

The US-France Income Tax Convention was signed on 31 August 1994 and entered into force on 30 December 1995, replacing the 1967 treaty. A protocol signed in 2009 introduced additional amendments including enhanced exchange of information provisions and modifications to the Limitation on Benefits article. Dividends paid from a French company to a US corporate shareholder owning at least 80% of voting shares for twelve months are fully exempt from withholding. A 5% rate applies to companies holding at least 10% of voting shares. All other dividends face 15% withholding. These rates represent significant reductions from France's domestic 30% dividend withholding rate. Interest and royalties are both exempt from withholding, making the treaty particularly favourable for intellectual property holding structures. The Limitation on Benefits article is detailed and designed to prevent conduit arrangements. Qualifying residents include individuals, publicly traded companies, pension funds, tax-exempt organisations, and entities that satisfy derivative benefits or active trade or business tests. France imposes a social levy (Prélèvements Sociaux) on certain investment income that the treaty does not fully address; its treatability has been subject to litigation and competent authority discussions. The treaty does not govern the French Wealth Tax (now repealed as a wealth tax but reinstated as IFI on real estate). The saving clause allows the US to tax its citizens and residents as if no treaty existed, a standard provision. France taxes its residents on worldwide income with relief through foreign tax credits. A Totalization Agreement ensures social security contributions are not duplicated for cross-border workers.