France: Eligibility of Japanese and Swiss pension funds for treaty rates
Effective
immediately
beneficial owners that are Japanese or Swiss pension funds may apply for reduced treaty rates on French dividends only if they declare that, at the end of the preceding fiscal year, more than 50% of the respective fund beneficiaries, members or participants are individuals resident of Japan or Switzerland.
Background
The French Tax Authorities have recently clarified the eligibility criteria for obtaining reduced treaty rates for pension funds resident in Japan and in Switzerland:
- Article 6A, a) of the protocol to the Double Taxation Treaty (“DTT”) signed between France and Japan, grants a reduced tax rate of 10% to a Japanese pension fund on French sourced dividends (foreseen by article 10, paragraph 2, b) of the said DTT), only if, at the end of the preceding fiscal year, more than 50% of its beneficiaries, members or participants are individuals resident of Japan.
- Article V of the protocol to the DTT signed between France and Switzerland grants a reduced tax rate of 15% to Swiss pension institutions (i.e. pension funds, retirement funds/“caisses de retraite” and provident institutions/“institutions de prévoyance”) on French sourced dividends (foreseen by article 11, paragraph 2, a) of the said DTT), only if, at the end of the preceding fiscal year, more than 50% of its beneficiaries, members or participants are individuals resident of Switzerland.
Impact on customers
Customers applying for treaty rates via relief at source (simplified procedure) or standard refund on behalf of beneficial owners that are pension funds and residents of Japan or Switzerland must specify:
- The exact percentage (which must be superior to 50%)
OR
- That more than 50%
of their beneficiaries, members or participants, that are individuals resident of Japan or Switzerland.
To comply with above requirements, beneficial owners that are Japanese or Swiss pension funds and eligible to obtain the DTT rates must follow one of the below processes:
- If they have not yet submitted Form 5000, they have to complete Box VII with the required information and specify to which fiscal year it is related (it must be the fiscal year preceding the one of the dividend payment); or
- If they have already submitted, or will submit, Form 5000 with Box VII not completed, a Self Declaration (attached at the end of this Announcement) on the pension fund letterhead, duly signed and stamped must complement Form 5000. This Self Declaration must be submitted on an annual basis for the simplified procedure or together with each Form 5000 for the standard refund.
Further information
For further information, customers may contact Clearstream Banking Tax Help Desk, 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, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.