Worldwide: Double Tax Treaties – Ratification Update
LUXEMBOURG
On September 5, 2014, the Ministers of Finance of France and Luxembourg signed an amendment (Lux Amendment) to the double tax treaty entered into between France and Luxembourg on April 1, 1958, as amended by the 1970 exchange of letters and by the 1970, 2006, and 2009 protocols (FR/Lux Treaty).
The Amendment, in line with the current OECD Model Tax Convention on Income and Capital, essentially attributes to France the right to tax capital gains arising from the disposal, by a Luxembourg resident, of shares into French real estate companies.
The Amendment will enter into force on the first day of the month following the completion of the reciprocal notification process attached to its ratification in each of France and Luxembourg. Further, for taxes on income that are withheld at source (such as the 33.33 percent withholding tax applicable under French tax law to capital gains realized by nonresident entities upon the disposal of French real estate assets or companies), the Amendment would apply to amounts that are taxable after the calendar year during which it enters into force.
A draft bill was submitted to the Luxembourg Parliament on June 9, 2015, and a draft bill was submitted to the French Parliament on July 1, 2015. It is consequently very likely that the ratification process will be completed in the coming months, and that the Amendment will enter into force on January 1, 2016.
Please see our Update for October 2014 for further details.
GERMANY
On March 31, 2015, the Ministers of Finance of France and Germany signed an amendment (Ger Amendment) to the double tax treaty entered into between France and Germany on July 21, 1959, as amended by the 1969, 1989, and 2011 protocols (FR/Ger Treaty).
A draft bill has already been submitted to the German Parliament, and it is France’s intent, to the best of our knowledge, to complete the ratification process of the Ger Amendment before year-end.
We will further analyze the new provisions and corresponding implications of the Ger Amendment in an upcoming Update.
SINGAPORE
On January 15, 2015, the Ministers of Finance of France and Singapore signed a new double tax treaty (New FR/Sing Treaty) that will come into force upon completion of the constitutional requirements in the two countries.
To the best of our knowledge, it is France’s intent to complete the ratification process of the New FR/Sing Treaty before year-end.
Please see our Update for February 2015 for further details.
ANDORRA
On April 2, 2013, the Ministers of Finance of France and Andorra signed a new double tax treaty (New FR/Andorra Treaty) that will come into force upon completion of the constitutional requirements in the two countries.
The New FR/Andorra Treaty entered into force on July 1, 2015. Please note, however, that most provisions will not be effective until January 1, 2016.
Interestingly, the New FR/Andorra Treaty provides that France retains the right to tax French nationals residing in Andorra, as if the New FR/Andorra Treaty did not exist. As France does not impose any taxes, as of yet, on the basis of nationality or citizenship, such provision should not give rise to any immediate consequences.
