Non-resident shareholders (other than American shareholders)
Dividends distributed by TOTAL to shareholders not residing in France are generally subject to French withholding tax at a rate of 30%.
This rate is increased to 75% for income paid outside France in a non-cooperative country or territory (“NCCT”), as defined by the French General Tax Code (Article 238-0 A). A list of these NCCTs is drawn up and updated annually by an order of the French authorities. This withholding tax is reduced to 21% for dividends received by individuals residing in a Member State of the European Union or in
Iceland, Norway or Liechtenstein.
Dividends paid to non-profit organizations headquartered in a Member State of the European Union or in Iceland, Norway or Liechtenstein are generally subject to withholding tax at a rate of 15%, subject to compliance with certain conditions stipulated in the administrative policy (see BOI-INT-DG-20-20-20-20-20120912 no. 290 et seq.).
However, withholding tax is not applicable to income distributed by French companies to foreign collective investment funds formed under foreign law and located in a Member State of the European Union or in another State that has entered into an administrative assistance agreement with France for the purpose of combating fraud and tax evasion.
To this end, these funds must fulfill two conditions:
- raise capital among a number of investors with a view to investing it, based on a defined investment policy; and
- have characteristics similar to those of collective investment funds formed under French law (open-end mutual fund (OPCVM), open-end property fund (OPCI) and closed-end investment fund (Sicaf)).
Under numerous bilateral international Tax Treaties signed between France and other countries for the purpose of avoiding double taxation (“Tax Treaties”), the withholding tax rate is reduced in cases where dividends are paid to a shareholder residing in one of the countries that signed such Tax Treaties, provided that certain conditions are met (“holder”).
The countries with which France has signed a tax treaty providing for a reduced withholding tax rate of 15% on French dividends are: Austria, Belgium, Canada, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Singapore, South Africa, Spain, Switzerland and the United Kingdom.
French administrative policy sets out the conditions under which the reduced 15% French withholding tax rate is applicable. Holders who are residents of one of the countries with which France has entered into a tax treaty providing for a reduced withholding tax rate may be eligible for immediate application of the reduced 15% withholding tax rate by electing the simplified procedure.
Under the simplified procedure, a non-resident shareholder may request a reduction in the withholding tax rate by presenting a certificate of residence which is consistent with the template available from the French tax office for non-residents at the following address: impots.gouv.fr (under the “search forms” heading: Form no. 5000-FR) and certified by the tax authorities of the country of residence. The shareholder must then send this certificate of residence as early as possible, and in all cases prior to payment of the dividends, to the institution that manages his or her accounts, whether in or outside France.
If the shareholder’s accounts are managed outside France, the account manager outside France must inform the payer institution in France, as soon as it receives the certificate of residence and prior to payment of the dividends, of the total amount of the dividends to which the shareholder is entitled and for which the payer institution may apply the reduced withholding tax rate stipulated in the treaty.
However, the payer institution in France may waive the requirement to present the certificate of residence provided for in the treaty if the shareholder’s identity and tax residence are known to it. In this case, the payer institution personally assumes responsibility for the immediate application of the reduced 15% withholding tax rate provided for in the treaty.
However, this simplified procedure does not apply to dividends paid to residents of Singapore given the specific procedures stipulated by agreement between France and this country.
If the non-resident holder is unable to present a certificate of residence from the tax authorities of his or her country of residence prior to the dividend payment date, or if the simplified procedure cannot be applied to the holder, the French payer institution will pay the dividends after deducting the ordinary withholding tax at a rate of 30%. However, the holder may request the 15% rate provided for in the treaty by being reimbursed for the amount overpaid (30%-15%). This reimbursement may be requested from the tax authorities by the shareholder, or by the payer institution if it has agreed to do so with the shareholder, by sending a specific form (forms 5000-FR and 5001-FR or any other appropriate form issued by the French tax authorities) prior to December 31 of the second year following the date on which the withholding tax was paid to the French Treasury. Generally speaking, any reimbursement of withholding tax should be paid within twelve months of the date on which the aforementioned form is filed. However, it may not be paid before January 15 of the year following the year in which the dividends were paid. Copies of the French forms referred to above are available from the French tax office for non-residents, at the following address: impots.gouv.fr (under the “search forms” heading).
Taxation of dividends outside France varies according to each country’s respective tax legislation.
In most countries, the gross amount of dividends is generally included in the shareholder’s taxable income. Based on certain conditions and limitations, the French withholding tax on dividends may result in a tax credit being applied to the foreign tax payable by the shareholder.
However, there are some exceptions. For example, in Belgium a 25% withholding tax applies to net dividends received by an individual shareholder.
Dividends received in shares and dividends paid in cash are generally taxed under the same regime.
Taxation on sales of shares
Capital gains on sales of shares realized by taxpayers residing outside France are, in principle, exempt from income tax in France. However, there are two exceptions to this rule: one for sales of holdings where the seller owns a permanent establishment or a fixed place of business in France to which his or her shares are attached, and the other for sales carried out by individuals or organizations residing or established in a non-cooperative country or territory.
However, the shareholder may be taxed on the capital gain or loss on the sale of shares in his or her country of tax residence.
Through the law of March 14, 2012, French lawmakers instituted a financial transaction tax that applies to all purchases of shares of companies listed on a French, European or foreign regulated market. This purchase must result in a transfer of ownership and the securities must be issued by a French company whose market capitalization exceeds €1 billion as of December 1 of the year preceding the year of taxation.
The tax also applies to securities representing shares of stockissued by a company, regardless of the place of establishment of its head office. This includes transactions carried out on certificates representing shares, such as American Depositary Receipts and European Depositary Receipts.
This financial transaction tax is equal to 0.2% of the share purchase price.
The party subject to the tax is the investment services provider (ISP), regardless of its place of establishment, when it executes buy orders for third parties or buys on its own account.
In France, ISPs are investment companies and credit institutions that have been approved to provide all or some investment services. Operators that provide equivalent services outside France are subject to the tax under the same conditions.
For purchases not involving an ISP, the tax is payable by the establishment acting as account administrator, regardless of its place of establishment.
When the shares are in registered form, the company issuing them performs the function of account keeper-custodian and is therefore liable for the payment of the tax for purchases not involving an ISP.
In principle, sales of shares of French companies are also subject to a French tax called “droit d’enregistrement” (transfer duty). However, French lawmakers have stipulated that transfer duties are not applicable to transactions that are subject to the financial transaction tax.
The above explanation is a general overview and shareholders are advised to consult their own tax advisor to determine the effect of Tax Treaties and applicable procedures as well as their income tax and, more generally, the tax consequences applicable to their particular situation.