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France Publishes Notice on Effect of MFN Clauses of Nine Tax Treaties

The French Public Finances General Directorate has published a notice on the effect of the most-favored nation (MFN) clauses of nine tax treaties. The effects of the clauses and the triggering tax treaties are summarized as follows:

1994 Tax Treaty with Bolivia:

  • 10% withholding tax rate for dividends if the beneficial owner is a company directly holding at least 25% of the paying company's capital (1997 Bolivia-Spain treaty);
  • Withholding tax exemption for interest paid in connection with the sale on credit of industrial, commercial, or scientific equipment (1997 Bolivia-Spain treaty); and
  • Withholding tax exemption for royalties paid for the use, or the right to use, a copyright in a literary, dramatic, musical, or artistic work (excluding royalties paid for motion pictures, video tapes for television, or magnetic tapes or video disks or tapes) (1997 Bolivia-Spain treaty).

2004 Tax Treaty with Chile:

  • 10% top withholding tax rate on interest (2010 Chile-Australia tax treaty) - 5% rate continues to apply for interest paid in respect of loans granted by bank and insurance companies, bonds or securities traded on recognized exchange, and the sale on credit of machinery and equipment.

1980 Tax Treaty with Egypt:

  • Withholding tax exemption for payments related to contracts for studies and consultants paid to a resident of France or Egypt (1996 France-Uzbekistan treaty and 1997 Egypt-Bahrain treaty).

1997 Tax Treaty with Estonia:

  • Withholding tax exemption for interest paid in respect of any loan granted by a bank (2014 Estonia-Luxembourg treaty); and
  • Withholding tax exemption for all royalties (2014 Estonia-Luxembourg treaty).

1992 Tax Treaty with India:

  • The exclusion of "films or tapes for radio or television broadcasts" from the definition of royalties and the deletion of "the use of, or right to use, industrial, commercial or scientific equipment" (1997 India-Sweden treaty); and
  • Changes to the scope of fees for technical services (1998 India-Portugal treaty).

2005 Tax Treaty with Libya:

  • Withholding tax exemption for royalties (2008 Libya-UK treaty).

1982 Tax Treaty with Saudi Arabia:

  • Independent personal services may be taxed if the period of stay in a Contracting State exceeds 183 days in a 12-month period (2007 Saudi Arabia-Turkey treaty);
  • PE for building/construction/assembly site and related supervisory activities if continue for more than 12 months in a Contracting State (2007 Saudi Arabia-Turkey treaty); and
  • PE for furnishing services in a Contracting State for more than 6 months in a 12-month period (2006 Saudi Arabia-Austria treaty).

1996 Tax Treaty with Uzbekistan:

  • 8% withholding tax rate on dividends (2013 Uzbekistan-Slovenia treaty) - 5% rate continues to apply if the beneficial owner holds at least 10% of the paying company's capital.

1993 Tax Treaty with Vietnam:

  • 5% withholding tax rate on dividends paid by a Vietnam company if the beneficial owner is a company directly holding at least 50% of the paying company's capital (1996 Vietnam-Belgium treaty);
  • 10% withholding tax rate on dividends paid by a Vietnam company in other cases (2008 Vietnam-Ireland treaty);
  • 5% withholding tax rate on royalties paid for the use of, or right to use, a patent, design or model, plan, secret formula or process, or for information concerning industrial or scientific experience (1995 Vietnam-Netherlands treaty);
  • 5% withholding tax rate on royalties paid for the use of, or the right to use, industrial, commercial, or scientific equipment involving the transfer of know-how (1995 Vietnam-Denmark treaty); and
  • The application of non-discrimination provisions in line with the Article 24 of the OECD Model (1994 Vietnam-UK treaty, 1995 Vietnam-Netherlands treaty, 1995 Vietnam-Germany treaty, and 1995 Vietnam-Denmark treaty).

Click the following link for the notice (French language), which includes links to additional information on the MFN clauses in the respective tax treaties.

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