DT7268 - Particular agreements: France: Relief from French tax and payment of the avoir fiscal

Claims to relief from French tax and for a refund of the avoir fiscal should be made on the following forms. These may be obtained from

• The Centre for Non-Residents, Nottingham

or

• Centre des impôts des non-résidents, 9 rue d'Uzs, 75002 Paris.

The claimant should complete the form in triplicate and send this to his Tax Office. If the necessary conditions are satisfied (see INTM162030), an Inspector should complete and sign the certificate on the back of each form, impress each form with the office date stamp, keep one copy and return the remaining copies in accordance with the directions on the explanatory note which is incorporated in the claim forms.

The forms are

RF-1GB/5084-claim for reduction of French withholding tax on dividends where the recipient is not entitled to payment of the avoir fiscal and for interest relief at source.

RF-2GB/5085-annual claim for exemption from French tax on interest on non - negotiable loans, deposits and securities.

RF-3GB/5086-annual claim for exemption from French tax on royalties.

RF-4GB/5087-claim for refund of French tax on dividends (except those from investment companies), on which the recipients are entitled to avoir fiscal.

RF-5GB/5088-claim for the reduction of the French tax on dividends paid by investment companies (beneficiaries entitled to avoir fiscal).

Annual claims on forms RF-2GB/5085 and RF-3GB/5086 should be made before the first payment in the year is due. The time limit for claims on forms RF-1GB, RF-4GB and RF-5GB is 31 December in the year following that in which the income was cashed by the beneficial owner. When the claims have been dealt with, the French authorities will forward copies of the completed forms RF-1GB and RF-5GB to the United Kingdom Revenue.

Claims for relief at source on dividends

Portfolio investors may arrange with the French payer of a dividend to receive French dividends under deduction of tax at the agreement rate of 15 per cent instead of suffering French withholding tax at 25 per cent. A claimant is not obliged to submit form RF-4GB/5087 to obtain this relief at source.

Instead, a simplified certificate may be supplied to the French paying agent, in a form prescribed by the French authorities, confirming that the claimant is

(a) UK resident,

(b) entitled to avoir fiscal in respect of the dividend (this includes certain UK pension funds - see DT7259),

(c) the owner of the shares as well as the dividends

and

(d) has no permanent establishment in France with which the shares are effectively connected.

The claimant must obtain confirmation from the UK Inspector dealing with his UK tax affairs that, to the best of the Inspector's knowledge, the declarations given by the claimant are correct. Confirmation should not be given where information available in the claimant's file conflicts with the declarations given but no enquiries need be raised in order to verify the declarations given. The Inspector should retain a copy of the certificate

Institutional investors

Institutional investors, for example, investment trusts, which are residents of the United Kingdom, may by prior claim to the Service de la Lgislation Fiscale, Sous-Direction E, 139 rue de Bercy, 75572 Paris, Cedex 12 be authorised to claim the reduction in withholding tax and the refund of the avoir fiscal direct from the French paying establishment.

Where this procedure has been authorised by the Direction Gnrale des Impts the claimant will be required to complete forms AF/5089 before obtaining refunds from the paying establishment. These forms may be obtained from

• Centre for Non Residents, Nottingham
• Centre des impôts des non-résidents, 9 rue d'Uzs, 75002 Paris
• the French banks or financial institutions concerned.

These forms do not require certification by a United Kingdom Inspector. The time limit for claims on form AF/5089 is 31 December in the year following that in which the dividends were cashed.

There are proposals to abolish the avoir fiscal for dividends distributed on or after 1st January 2005. As at August 2004, the draft Finance Bill for this had not yet been approved.