Tax treatment of dividends paid to French tax residents
For individual beneficiaries who are tax resident in France, the dividend is subject upon payment to a 17.2% social security tax and, in principle, to a mandatory non-definitive 12.8% levy. This tax is levied at source and is computed on the gross amount of the dividend.
For its taxation in 2022, this dividend will fully be eligible to the 40% tax rebate referred to in Article 158.3.2° of the French Tax Code where an express, global and irrevocable election is made for taxation under the progressive scale of personal income tax. Where this option is not made, the dividend will be taxed at a final 12.8% flat-rate and will not be eligible to this 40% rebate. In both cases, the 12.8% levy borne at the time of the payment of the dividend is deducted from the individual income tax due.
Tax treatment of dividends paid to non-residents
Dividends distributed out of the profits of the company to non-resident beneficiaries are subject to withholding taxes (income taxes) as follows:
- 12.8% for individuals,
- 26.5% for the other legal persons.
Such rates may however be overridden by international provisions, notably double-tax avoidance agreements that may exist between France and the country whose tax laws apply to the beneficiary.
The beneficiary is invited to check with his tax advisor (i) whether such double-tax avoidance agreement exists, (ii) the terms of such agreement and, (iii) if the rate provided in the said agreement is lower than the rate withheld by default, the procedure to obtain a refund of the excess amount withheld and/or a tax-credit.
Shareholders are invited to contact their usual advisors for further information about the applicable tax regime.