The income tax treaty between Finland and France was signed on 4 April 2023. Once in force and effective, the treaty will replace the 1970 tax treaty between the two countries.
The treaty covers French income tax, corporation tax, contributions on corporation tax, and general social contributions and contributions for the repayment of the social debt. It covers Finnish state income taxes, corporate income taxes, municipal tax, church tax, tax withheld at source from interest, and tax withheld at source from non-residents' income.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries generally apply the credit method for the elimination of double taxation. However, Finland will exempt dividends received by a Finnish company that directly controls at least 10% of the voting power in the paying French company.
Article 27 (Entitlement to Benefits) provides that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty.
The treaty will enter into force 30 days after the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force. The 1970 tax treaty between the two countries will cease to apply and will terminate on the date the new treaty is effective.