General information - types of securities, deadlines, other market specifics - France (securities held in CBF)
Types of securities
The eligible securities issued in France are as follows:
- Government debt securities:
- Government bonds - Obligations assimilables au Trésor (OAT);
- Short- and medium-term securities:
- Bons du Trésor Taux Fixe et Intérêt Annuel (BTAN);
- Bons du Trésor Taux Fixe et Intérêt Précompté (BTF);
- Corporate bonds issued before 1 January 1987 and redenominated in EUR on 1 January 1999;
- Fonds Communs des Créances (FCC);
- Titres de créances non-négotiables (TCNN);
- Titres Participatifs issued before 1 January 1987 (TP);
- Short- and medium-term corporate debt securities (not including bonds issued before 1 January 1987 and redenominated in EUR on 1 January 1999):
- Billets de Trésorie (BT);
- Billets Moyen Terme Négociables (BMTN);
- Certificats de Dépôt (CD);
- Bons des Institutions Financières Spécialisées (BIFS).
Equities (with cash dividend, stock dividend or choice dividend distributions):
Ordinary dividend payments made by French companies are eligible for relief at source, quick refund and standard refund.
Dividend payments made by the following entities are eligible for standard refund only:
- French Undertakings for Collective Investment in Transferable Securities (UCITSs), including Sociétés d'Investissement à Capital Variable (SICAV) and Fonds Communs de Placement (FCP);
- Sociétés de Capital Risque (SCR);
- Sociétés de Développement Régional (SDR);
- Sociétés Immobilières pour le Commerce et l'Industrie (SICOMI).
Types of beneficial owner
The following types of beneficial owner are recognised for tax purposes in France:
- Residents of Double Taxation Treaty (DTT) countries;
- Foreign individuals;
- Foreign Collective Investment Vehicles (CIVs);
- EU parent companies;
- Not-for-Profit Organisations;
- Foreign exempt entities;
- Particular foreign entities;
- French residents (direct customers of Clearstream Banking).
Beneficial owners not eligible for relief:
- Residents of a country that does not have a DTT with France;
- Residents of a country that have a DTT with France but do not fulfil the conditions of eligibility defined by the DTT, including the following:
- Some pension funds and mutual funds;
- Finnish investment funds and investment companies;
- German entities not subject to tax in their country of residence (for example, German Spezial Fonds).
- Residents of Singapore;
- U.S. partnerships.
Statutory deadline for reclaiming withholding tax
Unless otherwise stipulated in the tax treaty, the statutory deadline for reclaiming withholding tax is two years after the end of the calendar year in which the interest payment was made.
Exceptions to the above are reclaim applications for beneficial owners that are residents of the following countries, as indicated:
three (3) years after the income payment date;
three (3) years after the end of the calendar year in which the interest was paid;
three (3) years after the end of the calendar year in which the interest was paid;
four (4) years after the end of the calendar year in which the interest was paid.
Clearstream deadline for standard refund applications
The deadline by which Clearstream Banking must receive the documentation for an application is at the latest two months before the statutory deadline. All reclaim applications received after this deadline will be processed by Clearstream Banking on a “best efforts” basis. However, in such cases, Clearstream Banking will apply an extra charge and accepts no responsibility for forms that have not reached the French Tax Authorities by the date considered to be the statute of limitations deadline.
When are refunds received?
The estimated time for receiving a refund is from six months to two years, depending on the time that the application is filed and the complexity of the information supplied in the reclaim form.
Clearstream Banking does not guarantee the accuracy of the timings presented.
Notes on tax reclaims
Customers warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the customer's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, customers are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country.
The following details are specific to the French market.
Crédit d'Impôt Etranger (foreign tax credit)
Crédit d'Impôt Etranger is a foreign tax credit adjustment that is made when a part of the dividend paid by the French distributing company has been paid out of profits received from its foreign subsidiary.
The foreign tax credit is a reimbursement, to the French Parent company, of taxation already levied abroad on dividends distributed by the foreign subsidiaries. In order to avoid double taxation, the taxation is therefore corrected in cases where the foreign subsidiary is resident in a country having signed a Double Taxation Treaty (DTT) with France.
The amount of tax credit adjustment is announced by the French distributing company on or after the date of the dividend payment. It is added to the net dividend (gross basis) to determine the non-resident price and applied as follows:
- Through the standard procedure, withholding tax is applied at the standard rate of 30% until 31 December 2019, 28% until 31 December 2020 and 26.5 % from 1 January 2021 and, when the withholding tax is refunded on application of the DTT or, if applicable, of the EU Directive 90/435/EEC, the tax credit is added to the refund amount;
- Through the simplified procedure, withholding tax is applied at a rate of 26.5% or according to the DTT;
- Through the simplified procedure for foreign individuals, withholding tax is applied at a rate of 12.8% or according to the DTT;
- Through the simplified procedure for CIVs, withholding tax is not applied;
- Through the "0%" procedure, for EU parent companies or foreign exempt entities withholding tax is not applied;
- Through the "15%" procedure, for Not-for-Profit Organisations withholding tax is applied at a rate of 15%.
Offres Publiques de Rachat (OPRA)
The taxation treatment of Offres Publiques de Rachat (repurchase offers) in France for non-resident investors is as follows:
- OPRA of 10% or less of the existing shares, without cancellation:
If the OPRA from a listed company applies to 10% or less of the existing shares without cancellation of the repurchased shares, it falls under the provision of articles L.225-208 to L.225-212 of the French Commerce Code. In this case, Article 112-6 of the French General Tax Code provides that the profit is considered as a capital gain and is not subject to withholding tax;
- OPRA implying a capital decrease, with cancellation:
The issuing company may decide to reduce a part of its capital by repurchasing and then cancelling the bought-back shares. If the OPRA implies such a capital decrease with a compulsory cancellation, it then falls under the Article 112-1 of the French General Tax Code. It is then considered as a dividend distribution and as such is subject to the statutory withholding tax.
The Statement of Practice (BOI 4 J-1-06 of 13 October 2006) specifies the tax regime to be applied and states that the basis for the calculation of withholding tax is the acquisition price (that is, the value of the repurchased shares) if higher than the capital value average price. The capital value average price represents the price (reference price) per share as calculated by the issuer.
Applicable tax treatment:
- If the beneficial owner acquisition price is available and is higher than the capital value average price, the withholding tax is calculated on the difference between the repurchase offer price and the effective acquisition price;
- If the beneficial owner acquisition price is not available or is lower than the capital value average price determined by the issuer, withholding tax is calculated on the difference between the repurchase price and the capital value average price;
- If neither the beneficial owner nor the issuer has determined or communicated any price, then the full proceeds of the repurchase offer are subject to the statutory withholding tax.
It is the responsibility of each final beneficial owner, or its representative, to communicate the acquisition price to Clearstream Banking’s Corporate Actions department together with their instruction to participate in the event.
Clearstream Banking does not require proof of the acquisition price but such proof must be at its disposal should the French Tax Authorities request it.
If the acquisition price is not provided by or on behalf of the beneficial owner, the capital value average price, if available, will be used by default.
Reclaims of withholding tax:
The standard refund procedure is available if the beneficial owner qualifies for the benefit of a reduced rate of withholding tax in accordance with a Double Taxation Treaty (DTT) between its country of residence and France.
Customers must complete Forms 5000 and 5001 as for a dividend withholding tax reclaim. To ease the tax reclaim process, customers are requested always to mention clearly on the tax form that the reclaim relates to a repurchase offer (OPRA).
Notes on French Tax Forms
Forms 5000 and 5001
Each form is available in French, German, English, Spanish, Italian and Dutch and is to be completed in triplicate: two versions in the foreign language most appropriate to the DTT country and one version in French.
The information in all three copies is identical and they must all three be completed and sent to the local tax authorities of the beneficial owner’s country of residence for certification purposes. These forms must be printed on both sides.
The copies are processed as follows:
- The first local language copy is kept by the tax authorities of the beneficial owner’s country of residence;
- The second local language copy is returned and kept by the beneficial owner;
- The third copy, in French, is returned and submitted to the French Tax Authorities.
The French Tax Authorities require that Form 5002 be used for standard refund of tax from interest. This service is not available through Clearstream Banking.