France's tax authority has issued guidance on the new withholding tax framework for dividends paid to residents of nine treaty countries — including Gulf states, Finland, and Lebanon — effective 1 January 2026, under which payments are subject to withholding at the standard rate upfront, with recipients required to demonstrate treaty compliance to claim a refund.
France’s tax authority has issued guidance clarifying its taxation methods for dividends and similar income under international tax treaties, particularly focusing on treaty benefits for distributions to residents of countries with specific withholding tax arrangements.
New withholding tax framework
Effective 1 January 2026, under Article 119 bis A of the French General Tax Code, dividends paid to residents of countries with tax treaties that don’t impose or fully exempt withholding tax are now subject to withholding at the standard rate under Article 187 when payments are made.
Recipients can claim refunds if they demonstrate compliance with all treaty conditions for exemption. This change follows Law No. 2025-127 of 14 February 2025 on Finance for 2025.
Applicable countries and scope
The provisions currently apply to tax treaties with nine countries: Saudi Arabia, Bahrain, Egypt, United Arab Emirates, Finland, Kuwait, Lebanon, Oman, and Qatar. The rules cover income from shares, equity interests, and similar products outlined in Articles 108 to 117 bis of the tax code.
Key conditions for applicability:
- Recipients must reside in a treaty country, with no minimum participation requirements for withholding tax exemption
- Recipients cannot already qualify for exemption under French domestic or treaty law based on their status or participation threshold
Payment institution responsibilities
Paying institutions cannot use simplified procedures when making dividend payments. Instead, they must:
- Deduct withholding tax at the statutory rate when making payments
- Submit electronic files to tax authorities upon request containing payment amounts, dates, issuer identity, and beneficial owner information
- Provide all available identification details if the beneficial owner is unknown
Resident status and beneficial ownership requirements
Claimants must submit Form 5000-FR-SD (CERFA 12816), endorsed by their home country’s tax authority, and Form 5001-FR (CERFA 12816) to establish treaty-based residency.
To qualify as a “beneficial owner,” claimants must prove they have effective rights to use and enjoy dividend income without any contractual or legal obligation to pass payments to third parties. This requirement applies to all treaties, regardless of explicit beneficial ownership language, following the Council of State’s 8 November 2024 ruling (No. 471147).
Documentation requirements
Applicants must provide payment and withholding tax evidence for all intermediaries, plus a sworn statement confirming the beneficiary has no obligation to sell securities or transfer income. Legal entities must additionally submit their activity description, corporate purpose, available resources, governance structure, distribution policy, and acquisition details.
Tax authorities may request further verification, including securities lending or borrowing contracts, repurchase agreements, derivative transactions, account statements for dividend-bearing securities, and any arrangements with similar economic effects. Applicants may submit alternative documents that offer equivalent proof of treaty compliance during the review process.
