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Summary

Implementation of articles 52 to 55 of the Constitution, Act 2003-214 of 12 March 2003. The present advent to the Franco-German Tax Convention of July 21, 1959 has the effect of eliminating the transfer of tax to natural persons for the dividends paid on or after January 1, 2002 by companies located in France to resident shareholders of Germany. It follows the extensive tax reform implemented by Germany in the year 2000, which amended the tax regime applicable to dividends distributed from 2001 to its residents. It has set a single corporate tax rate of 25% and removed it from tax on dividends paid by German companies. In return, the dividend is imposed in the hands of natural persons only after deduction of a 50% payout and dividend-paying companies are no longer taxed on such income regardless of the level of participation in the distributing corporation. Thus, in this new system, the German treasury ensures the elimination of the double economic taxation of the dividends by taxing the dividends paid to legal persons or by granting to all natural shareholders a 50% discount, abatement granted both with respect to dividends relating to the shares of German companies and those from foreign sources. This reform thus leads to the elimination of the double taxation of foreign-source dividends, the burden of which is entirely to Germany as a state of residence.In this context, the transfer of France's tax credit to Germany, which is provided for in the tax agreement for natural persons and societies that hold less than 10% of the capital of the distributing society loses its justification. The decision to delete the tax had been taken jointly by both parties without modifying the provisions of the tax agreement for legal persons, but the current drafting of the treaty does not allow to refuse to transfer the tax credit to natural persons who remain taxable on a part of the French source dividend. The approval of this agreement was authorized by the Act of 12 March 2003. I entered into force on 1 June 2003. Implicit amendment of Decree 61-1208 of 31-10-1961.

Keywords

AFFAIRS, INTERNATIONAL AGREEMENT , BILATERAL AGREEMENT , FRANCE , GERMANY , IMPOT , DOUBLE IMPOSITION , ADMINISTRATIVE ASSISTANCE , LEGAL ASSISTANCE , IR , IF , CONTRIBUTION , PATENTE , FUNCIERE CONTRIBUTION

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JORF n°218 of 20 September 2003 page 16131
text No. 11



Decree No. 2003-898 of 15 September 2003 on the publication of the avenor to the agreement between the French Republic and the Federal Republic of Germany with a view to avoiding double taxation and establishing rules of mutual administrative and legal assistance in respect of taxes on income and on property, as well as in respect of the contribution of the patents and contributions of land, of 21 July 1959, as amended by the date of 9 June 1989 and

NOR: MAEJ0330065D ELI: https://www.legifrance.gouv.fr/eli/decret/2003/9/15/MAEJ0330065D/jo/texte
Alias: https://www.legifrance.gouv.fr/eli/decret/2003/9/15/2003-898/jo/texte

President of the Republic,
On the report of the Prime Minister and the Minister for Foreign Affairs,
Considering articles 52 to 55 of the Constitution;
Having regard to Act No. 2003-214 of 12 March 2003 authorizing the approval of the avenor to the agreement between the French Republic and the Federal Republic of Germany with a view to avoiding double taxation and establishing rules of mutual administrative and legal assistance in respect of taxes on income and on property, as well as in respect of the contribution of the patents and land contributions, of 21 July 1959, as amended by the Avenor of 1989
Having regard to the amended Decree No. 53-192 of 14 March 1953 concerning the ratification and publication of the international commitments undertaken by France;
In view of Decree No. 61-1208 of 31 October 1961 on the publication of the agreement between France and the Federal Republic of Germany with a view to avoiding double taxation and establishing rules of mutual administrative and legal assistance with respect to taxes on income and property, as well as in respect of contributions of patents and land contributions, of 21 July 1959;
In view of Decree No. 70-1067 of 17 November 1970 on the publication of the Avender to the Convention of 21 July 1959 between the French Republic and the Federal Republic of Germany with a view to avoiding double taxation and establishing rules of mutual administrative and legal assistance with respect to taxes on income and property, as well as in respect of contributions of patents and land contributions, signed in Bonn on 9 June 1969;
In view of Decree No. 90-987 of 5 November 1990 on the publication of the amendment to the agreement between France and the Federal Republic of Germany with a view to avoiding double taxation and establishing rules of mutual administrative and legal assistance with respect to taxes on income and on property, as well as in respect of contributions of patents and land contributions, of 21 July 1959, as amended by the date of 9 June 1989,
Decrete:

Article 1

The amendment to the agreement between the French Republic and the Federal Republic of Germany with a view to avoiding double taxation and establishing rules of mutual administrative and legal assistance with respect to taxes on income and property, as well as with respect to the contribution of the patents and property contributions, of 21 July 1959, as amended by the date of 9 June 1969 and by the date of 28 September 1989, signed in Paris.

Article 2

The Prime Minister and the Minister for Foreign Affairs are responsible for the execution of this Order, which will be published in the Official Journal of the French Republic.

Annex

A V E N A N T

THE CONVENTION AGAINST THE FRANÇAISE REPUBLIC AND THE FIELD REPUBLIC OF GERMANY TO THE UNITED NATIONS ADMINISTRATIVE AND LEGAL REVIEW
The Government of the French Republic and the Government of the Federal Republic of Germany,
Desirous of amending the Convention between the French Republic and the Federal Republic of Germany with a view to avoiding double taxation and establishing rules of mutual administrative and legal assistance in respect of income and property taxes, as well as in respect of the contribution of the patents and land contributions, of 21 July 1959, as amended by the Avender of 9 June 1969 and the Avender of 28 September 1989, below,
agreed on the following provisions:

Article 1

1. Paragraph 3 of Article 9 of the Convention is repealed and the following substituted:
"(3) By derogation from paragraph 2, dividends paid by a capital corporation that is a resident of France to a capital corporation that is a resident of the Federal Republic and holds at least 10% of the social capital of the first corporation may not be taxed in France. »
2. Paragraph 4 of Article 9 of the Convention is repealed and the following substituted:
« (4) A resident of the Federal Republic who receives dividends paid by a corporation that is a resident of France obtains the refund of the pre-payment as the pre-payment was actually paid by the corporation on the basis of these dividends. The gross amount of the deposit refunded is considered a dividend for the purposes of the Convention. The provisions of paragraphs 2 and 3 shall apply to it. »

Article 2

Paragraph 1 of Article 20 of the Convention is amended to read:
Paragraph (b) is repealed and the following substituted:
“(b) With respect to dividends, the provisions of paragraph (a) apply only to the net income corresponding to the dividends paid by a capital corporation that is a resident of France to a capital corporation that is a resident of the Federal Republic and holds at least 10% of the social capital of the first corporation. Such a rule also applies to participations whose dividends would fall under the previous sentence. »

Article 3

1. Each of the Contracting Parties shall notify the other of the completion of the required procedures with respect to the implementation of this Agreement. The latter will enter into force on the first day of the second month following the day of receipt of the last notification.
2. The provisions of this Advant shall apply to revenues collected as of January 1, 2002.

Article 4

1. This Avender shall remain in force as long as the Convention is applicable.
2. The competent authorities of the two Contracting Parties shall, after the coming into force of this Avenor, be empowered to publish the text of the Convention as amended by the Avenor.
Done in Paris on 20 December 2001, in duplicate, in French and German, each version being equally authentic.

For the Government
of the French Republic:
Loïc Hennekinne,
Secretary-General
Ministry
Foreign Affairs
For the Government
of the Republic of
Federal Republic of Germany:
Fritjof von Nordenskjöld,
Ambassador of the Republic
Federal Government of Germany

Done in Paris, September 15, 2003.

Jacques Chirac

By the President of the Republic:

The Prime Minister,

Jean-Pierre Raffarin

Minister of Foreign Affairs,

Dominique de Villepin

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