France: Taxation treatment of French Choice dividends revised
Effective
immediately
the procedure for the taxation treatment of French Choice dividends has been updated taking into account recent market changes.
This is further to our Announcement A10134, dated 20 August 2010.
French Choice (or “optional”) dividends are subject to withholding tax upon payment of the dividend, whether the dividend is paid in cash or in securities.
Relief at source or standard refund of withholding tax can be obtained for eligible beneficial owners (BOs) on most French Choice dividends as follows:
| Equities | Holding restriction? | Withholding tax rate | Relief at source | Quick refund | Standard refund |
| No | 30% | ||||
| Residents of a Double Taxation Treaty (DTT) country | Yes | No | Yes | ||
| EU/EEA-DTT resident individuals | Yes | No | No | ||
| EU parent companies | Yes | No | Yes | ||
| Non-Profit Organisations | Yes | No | Yes | ||
| Particular foreign entities | Yes | No | Yes | ||
| Foreign Collective Investment Vehicles (CIVs) a | Yes | No | No | ||
a. Eligible CIVs are UCITS IV (UCITS established in an EU member state and governed by Directive 2009/65/CE of 13 July 2009) or AIF (Alternative Investment Funds established in an EU/EEA member state and governed by Directive 2011/61/UE of 8 June 2011).
Notifications
Clearstream Banking1 will send notifications, before the instruction deadline, pre-advising the corporate choice dividend and the tax relief possible, as follows:
- Notification of Choice dividend event (on Rights ISIN code) – from our Corporate Actions department, containing details of the Choice dividend event, including details of the reinvestment options, deadlines and the documentation requirements for tax relief;
- Notification of Choice dividend event (Generic event on Rights ISIN code) - from our Tax department, containing general details of the Choice dividend event, deadlines and the documentation requirements for tax relief.
Relief at source procedure
Relief at source from withholding tax on French Choice dividends is available to the eligible beneficial owners (BOs).
To obtain relief at source, on either the cash option or the stock option, customers must provide CBL, by the prescribed deadlines, with the requested certification documentation and the related corporate action instruction.
Documentation requirements
The documentation requirements and deadlines are as generally described in our Market Taxation Guide – France and summarised below.
For residents of a DTT country, the following documentation must be sent to CBL by the deadline prescribed in the SWIFT notification:
- Form 5000 - Certificate of Residence;
- One-Time Certificate of Authorisation for the Simplified Procedure;
- Per-payment detailed List of Beneficial Owners;
Plus, if the beneficial owner is a collective investment scheme:
- Form 5000 - Attestation of Percentage.
Note: Additional details may be required for certain beneficial owner types (such as EU/EEA residents, EU parent companies, non-profit organisations and particular foreign entities) concerning the documentation requirements and depending on the deadlines applicable.
For eligible CIVs, the following documentation must be sent to CBL by the deadline prescribed in the SWIFT notification:
- A Form RPPM duly completed, signed and stamped;
- Per-payment detailed List of Beneficial Owners.
In addition, the French Tax Authorities may at any time require additional documents (such as tax attestations, powers of attorney etc.). Corporate action instructions
The per-payment Corporate Action Instruction must be provided to CBL’s Tax Department by the customer no later than the deadline prescribed in the SWIFT notification. It must be sent via SWIFT MT565 or MT599 or CreationOnline and must include the following details:
- Cash option:
- Customer’s account number;
- Rights ISIN code;
- Payment date;
- Cash option;
- A breakdown of the position with the nominal and respective tax rate to apply (15%, 10% or 0% according to the DTT; 15% or 0% for positions held by CIVs; 30% for non-eligible positions);
- Stock option (example of reinvestment in stock at 70% with tax rate of 0% or applicable DTT):
- Customer’s account number;
- Rights ISIN code;
- Payment date;
- Stock option with reinvestment at 70%;
- A breakdown of the position with the nominal amounts and tax rates to apply (0% or 15% for positions held by CIVs or applicable DTT).
N.B.: The tax rate (if other than 30%) and/or the status of the CIV must be mentioned clearly in the Narrative of the MT565 or CreationOnline instruction.
Note: The customer may be required to send its corporate action instruction(s) to both our Corporate Actions department and our Tax department. The deadline for instructions to our Corporate Actions department for the reinvestment option may not be the same as the deadline for instructions to the Tax department for the tax option. Reinvestment options and instructions
For Choice dividends on French equities, the available reinvestment options are decided by the issuing companies.
The following table lists the possible reinvestment options and the departments to which the Corporate Action reinvestment option instructions are to be sent:
Note: All corporate action tax rate instructions must be sent to the Corporate Actions department.
| Reinvestment option | Tax applicable | Department to receive corporate action reinvestment option instructions |
| Cash | 30%, DTT or 0% | Tax |
| Stock at 70% | 0% or DTT | Tax |
| 30% | Corporate Actions | |
| Stock at 85% | 15% | Corporate Actions |
| 30% | n/a | |
| Stock at 90% | 10% | Corporate Actions |
| 30% | n/a | |
| Stock at 100% | 0% | Corporate Actions |
| 10% | Tax | |
| 15% | Tax | |
| 30% | n/a | |
| Stock at 100% - Exempt entities | 0% | Corporate Actions |
| Stock at 100% - CIVs | 0% | Corporate Actions |
Partial reinvestment
Partial reinvestment of both cash and securities, for a single beneficial owner, is not allowed for French Choice dividends unless decided otherwise by the issuing company and specified in our SWIFT MT564. This specific rule applies to the final beneficial owner only.
However, individual beneficial owners can choose more than one option for reinvestment in stock.
Standard refund procedure
A standard refund of withholding tax on Choice dividends from French equities is available to eligible beneficial owners if relief at source has not been obtained.
For details of the standard refund procedure, please refer to our Market Taxation Guide - France.
Further information
For further information, customers may contact the Clearstream Banking1 Tax Help Desk on:
| Luxembourg | Frankfurt | Singapore | |
| Email: | tax@clearstream.com | tax@clearstream.com | tax@clearstream.com |
| Telephone: | +352-243-32835 | +49-(0) 69-2 11-1 3821 | +65-6597-1665 |
| Fax: | +352-243-632835 | +49-(0) 69-2 11-61 3821 |
or Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
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