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, in particular the eligibility of foreign Collective Investment Vehicles (CIVs) to exemption.
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 resident individualsa | 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) b | Yes | No | No | ||
a. Individual residents of a member country of the EU or EEA that has concluded a Double Taxation Treaty (DTT) that includes an administrative assistance agreement with France. (Tax rate 21%)
b. Eligible CIVs are UCITS IV (UCITS established in a European Union member state and governed by Directive 2009/65/CE of 13 July 2009) or AIF (Alternative Investment Funds established in a European Union or European Economic Area member state and governed by Directive 2011/61/UE of 8 June 2011).
Notifications to customers
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 (on Rights ISIN code) - from our Tax department, containing general details of the Choice dividend event, tax specific 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 eligible CIVs, the following documentation must be sent to CBL by the prescribed deadline, as stated in the SWIFT notification:
- A Form RPPM duly completed, signed and stamped, must be received by CBL at the latest two business days before the Choice dividend market deadline;
- Per-payment detailed List of Beneficial Owners, must be received by CBL at the latest one business day before the Choice dividend market deadline.
In addition, the French Tax Authorities may at any time require additional documents (such as tax attestations, power of attorneys, etc.).
For residents of a DTT country, the following documentation must be sent to CBL by the prescribed deadline , as stated in the SWIFT notification:
- Form 5000 - Certificate of Residence, must be in CBL at the latest one business day before the first dividend payment date to which it applies;
- One-Time Certificate of Authorisation for the Simplified Procedure, must be received by CBL at the latest one business day before the first dividend payment date to which it applies;
- Per-payment detailed List of Beneficial Owners, must be received by CBL at the latest 20 business days after the Choice dividend payment date;
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. Please refer to our Market Taxation Guide – France.
Corporate action and tax instructions
The instructions to be sent are different according to the type of beneficial owners and to the type of reinvestment chosen . Customers must send a corporate action instruction to our Corporate Actions department to confirm their choice according to the available options (cash or securities). They may also be required to send a separate tax instruction to our Tax department. The deadline for sending instructions to our Corporate Actions department for the reinvestment option may not be the same as the deadline for sending instructions to the Tax department for the tax option.
Important: Instructions received after the deadline will be automatically rejected.
Instructions to be provided by CIVs:
The instructions of both reinvestment option (cash or securities) and tax rate must be provided to Clearstream Banking’s Corporate Actions department by the customer no later than the deadline (early deadline) prescribed in the SWIFT notification. It must be sent via SWIFT MT565, MT599 or CreationOnline and must include the following details:
- The reinvestment option (cash or securities);
- The applicable tax rate according to the fiscal status of the customer (0% CIV).
N.B.: The status of the CIV must be mentioned clearly in the narrative of the MT565, MT599 or CreationOnline instruction.
Instructions to be provided by other BO types:
An instruction must be provided to Clearstream Banking’s Corporate Actions department by the customer no later than the deadline prescribed in the SWIFT notification. It must be sent via SWIFT MT565, MT599 or CreationOnline and must include the following details:
- The reinvestment option (cash or securities);
- The applicable tax rate according to the fiscal status of the customer (0%, 10%, 15% or 30%).
N.B.: The tax rate (if other than 30%) must be mentioned clearly in the narrative of the MT565, MT599 or CreationOnline instruction.
And,
When the cash option has been instructed and a reduced tax rate claimed, a SWIFT MT565 or MT599 or CreationOnline instruction must be provided to Clearstream Banking’s Tax Department by the customer no later than the deadline prescribed in the SWIFT notification. It must include the following details:
- Customer’s account number;
- Rights ISIN code;
- Payment date;
- Cash option(if applicable);
- A breakdown of the position with the nominal and respective tax rate to apply (0%, 10% or 15% according to the DTT; 30% for non-eligible positions).
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.
1Clearstream Banking refers to 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).