France: Impact of Brexit on dividend withholding tax procedures applicable to UK residents
Cleastream Banking1 informs customers that certain withholding tax reduced rates or exemption currently granted to residents of the United Kingdom (UK) based on the UK’s European Union (EU)/European Economic Area (EEA) membership will cease to apply in 2021 as a consequence of Brexit.
Effective
1 January 2021
unless an agreement is found between the UK and EU/EEA Member States, such exemptions or reduced rates foreseen by French domestic law will no longer apply. UK residents will still have the possibility of applying for double taxation treaty (DTT) benefits upon submission of the relevant certification.
Background
Until the end of the transition period on 31 December 2020, UK residents are considered to be part of the EU/EEA and may benefit from certain reduced rates or exemptions foreseen by French domestic law and European directives.
This applies to UK Collective investment vehicles (CIVs) governed by Directive 2009/65/EC of 13 July 2009 (the “UCITS IV” directive) or by Directive 2011/61/EU of 8 June 2011 (the “AIFM” directive) who may currently obtain a full exemption (or 15% when the income if distributed by a SIIC) on French-sourced income distributions.
UK parent companies holding a substantial participation in the capital of the French company paying a dividend may also obtain a full exemption through the European 0% procedure if the UK parent company and the French subsidiary company meet the conditions stated in EU Directive 90/435/EEC of 23 July 1990.
Unless informed otherwise from the UK or French tax authorities, the above stated exemptions will no longer apply to UK residents from the moment the UK exits the EU after the transitional period ending on 31 December 2020.
UK CIVs will still have the possibility of obtaining DTT rates as of 1 January 2021, as explained below.
Impact on customers
As of 1 January 2021, CIVs resident in the UK may no longer apply for full exemption (or 15% on SIIC) available to EU/EEA CIVs through the simplified procedure. Two options are then available:
- Continue to claim the exemption as non-EU CIVs fulfilling the conditions of Article 119 bis, paragraph 2, of the French Tax Code (FTC) and satisfying all the criteria to prove their comparability with French CIVs. Relief at source can be offered to those beneficial owners only upon receipt of a positive decision from the French administration. Please refer to C20044 for full details of the procedure.
Relief at source can then be granted provided that the following documentation is submitted before the Clearstream Banking deadline:- One-Time Certificate for French securities (the OTC): The OTC must bear the applicable rate according to French domestic law;
- RPPM (revenus et profits du patrimoine mobilier - non-EU CIVs) form;
- Decision letter of the DINR;
- Corporate Action Instruction, if applicable;
- Per-payment Detailed List of Beneficial Owners, if applicable;
- Power of Attorney, when applicable.
- Claim the DTT rate of 15% provided that the following documentation is submitted before the Clearstream Banking deadline:
- A One-Time certificate for French securities: The OTC must bear the applicable rate according to the Double Taxation Treaty concluded between France and the UK;
- Form 5000 Certificate of Residence: The form duly completed, signed and stamped;
- Form 5000 Attestation of Percentage: To attest to the percentage of resident shareholders during the accounting period in which the income was realised. In Box VII, the percentage must be 100% in order to participate in the simplified procedure. If the percentage is lower, the company/fund can apply for the standard refund procedure;
- Corporate action instruction, if applicable;
- Per-payment Detailed List of Beneficial Owners, if applicable;
- Power of Attorney, when applicable.
Note: A form 5000 certificate of residence provided in original in 2020 can be used to apply the DTT rates during the first quarter of 2021 on condition that a new form 5000 for 2021 is received before 31 March 2021. Please refer to C20068. for additional information on the procedure of annual renewal of forms 5000.
Clearstream Banking deadlines
All deadlines per certification are available in Market Taxation Guide - France and in our per event/instrument notification.
Brexit FAQ
The French tax authorities published a Brexit FAQ webpage available in French only. Please consult your tax advisor should you require assistance on this.
Further information
For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.
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1. Clearstream Banking refers collectively to 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, and 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.