On 24 February 2023, the French tax authority released two rulings related to the levy of dividend withholding tax on payments to non-residents for financial transactions that are deemed to be equivalent to dividends.
In the first ruling, it is highlighted that the imposition of dividend withholding tax extends to payments categorized as “similar income” or “proceeds from stocks and shares” that are distributed by French companies. Furthermore, the ruling specifies that this withholding tax is enforceable only if the recipient of the income is a person who is not a tax resident of France and has the authority to freely dispose of the income.
the second ruling offers advice on the application of withholding tax with regards to the temporary purchase of shares and derivative product transactions executed with non-resident parties. Additionally, the ruling affirms that any transfer of value that is dependent upon or linked, either explicitly or implicitly, to a dividend payment qualifies as a “dividend equivalent” and is subject to the applicable withholding tax.
