Key Post Tax treatment of French Dividends

Hi, I'm interested in buying a small amount of Shares of a French company. This company pays a decent dividend. According to this article,
http://www.kpmg.com/Global/en/Issue...dends-tax-capital-contribution-proposals.aspx
it seems to me that the French government deduct a 3% tax on dividends distributed by French comapnies, regardless of your residency. Does anyone know if this is the only tax liability on the French side. I know I will be subject to normal Irish income tax on this side.

Thanks in advance.

I have found it almost impossible to get clear answers on the taxation of foreign dividends and have asked people to write a Key Post on the topic

To be honest, buying a small amount is not worth the hassle of the tax complications.

I had French shares. Tax withheld was 25%. Irish income tax calculated on NET dividend received and from what I've read as an individual shareholder you can not claim French tax back.
And couple of days ago I received email about new French financial transaction tax 0.2% (equivalent to Irish stamp duty I suppose)

I wonder if I need to dust down my artice on buy the Top Ten Irish shares!

Brendan

Actually, it's more like


Of course, you have to reclaim the refundable tax from the French tax authorities which is a pain in the neck but hey, a refund is a refund

Also, credit for foreign tax deducted may be less than 18 depending on your overall income split between Irish and foreign sources.

Nomansland said:

Hi, I'm interested in buying a small amount of Shares of a French company. This company pays a decent dividend. According to this article,
http://www.kpmg.com/Global/en/Issue...dends-tax-capital-contribution-proposals.aspx
it seems to me that the French government deduct a 3% tax on dividends distributed by French comapnies, regardless of your residency. Does anyone know if this is the only tax liability on the French side. I know I will be subject to normal Irish income tax on this side.

Thanks in advance.

Click to expand...

As well as the new 3% tax, the French will withhold a further 30% as a Dividend Withholding Tax of which 15% is refundable from the French Tax Authorities because the maximum tax allowed on dividends in the double-taxation treaty between Ireland and France is 15%.

You can reclaim this refund from the French Authorities.

JPD

That is an excellent informed answer.

So the effective tax rate for an Irish tax payer is our marginal rate? And the system is designed to produce that result?

I don't have French shares, but I do have German shares. Would you have the same table for them?

I had Swiss shares (Arzyta) and it took about three years to get the refundable tax back.

Brendan

The tax systems are designed to do this because of the common EU market rules - you cannot discriminate between national citizens and other EU citizens - 3 cheers for the EU! But there is a lot of bureacratic obstacles to overcome but it isn't rocket science by any means.

The situation with UK dividends is quite different - not so sure why this is but the UK tax deducted isn't refundable and I don't think you get relief for the tax deducted.

So yes, the effective tax rate is your marginal tax rate - which could be 0%, 20% or 41%

I use a French broker and they send me the paperwork to do the refunds every year around Aug/Sept for the previous year. I get paperwork signed by the Irish Revenue, send it back and Hey Presto, get the the tax refund credited to my account around Oct so there is quite a delay.

I held some Dutch shares for a while and claimed a small refund from them too using the Dutch tax authorities web-site - it all worked out smoothly.

I also had a few German shares but the refund amount was so small because the dividends were small, that I didn't bother claiming but again the German Tax Authorities website has all the paper work required to do this.

It's a pity that the broker can't just not deduct the refundable part in the first place, but presumably lots of people don't bother reclaiming so there is no incentive on the part of the tax authorities to do this.

Also non-EU countries such as US, Canada, Australia, etc have different rules again so it is quite complex if you have a portfolio of shares scattered around the world.

Brendan Burgess said:

JPD

That is an excellent informed answer.

So the effective tax rate for an Irish tax payer is our marginal rate? And the system is designed to produce that result?

I don't have French shares, but I do have German shares. Would you have the same table for them?

I had Swiss shares (Arzyta) and it took about three years to get the refundable tax back.

Brendan

Click to expand...

The few French shares that I have are held with a German broker who just get's me to sign a form and handles everything. I can't say for sure how long it actually takes to receive the funds, as part of the deal with my broker is that they take a percentage of the refund and in return credit my account pretty much immediately. It's worth it to me as it saves the hassle of paper work and remembering to follow up on it.

JPD, great post with the table summary.

French Withholding Tax ReClaim - what form?

Hi there - what form do you complete & sign to reclaim French Withholding tax - is the form 5003-EN. Does any doucmenaiton need to company this form once completed & signed by Irish Revenue. Thanks.

I just send the form signed by the Revenue and myself back to my broker and he credits my account within a few weeks. I don't think he has to wait for a payment from thenFrench revenue - he just deducts it from the DWT due for that month

Update January 2018 - France has reduced the Dividend Withholding Tax for non-residents from 21% to 12.8%

This is below the threshold of 15% that they are allowed in the Franco-Ireland double taxation treaty, so there will be no need to reclaim the excess tax deducted as there will be none!

That make's life a little bit easier.

Resurrecting this thread, I have completed the French Forms 5000 and 5001 to reclaim excess French dividend withholding tax for 2019, and claim the 15% rate in the France-Ireland treaty.
This has to be signed by the "foreign tax authority", i.e. the Irish Revenue.
Does anyone know what section in the Revenue deals with these forms?

Send them into the Income tax office that deals with your income tax

Send them in with an accompanying letter - they will sign the forms and return them all to you even the copy that is designated for their use

I am surprised that excess tax was deducted as the French DWT was reduced to 12.8% for individuals from 1st Jan 2018 - who was deducting the DWT?

I went through all of this,
the forms need to be stamped physically by Revenue, and the offices are closed to public.
I spent 2 years trying to claim back the tax from French authorities, and used Taxback.
They rejected both applications.
I was claiming back 10,000 EUR in tax withheld.
I eventually sold the shares as its not worth the hassle.

I always posted the forms in and got them back stamped a week later.

The French are notorious for requiring all forms correctly filled in, t's crossed, I's dotted and properly stamped but once that is done, then the rest is like clockwork - a model of administrative efficency honed though centuries of centralised state control dating back to 1500s

Hi Bluebeard,

I need to complete said form as well.

Would it be possible for you to post up a dummy example of completed form?

Thanks in advance.

JPD, French dividend withholding tax rate (absent treaty relief) was reduced from 30% in 2018 and 2019 to 28% in 2020.
"Send them to the income tax office that deals with your income tax": Well I only ever deal with ROS. I have not dealt with a physical office for many years.

I was hoping to find a postal address for whatever specialised office deals with residence confirmations of this sort.

The Revenue website is almost stripped clean of physical addresses for income tax. I see self assessment queries can be sent to:
Gillian Ryan, Business Division – Dubin South, Plaza Complex, Belgard Road, Tallaght, Dublin 24, D24 T2OT.

My reclaim is not large but I want to see how to use this system, indeed whether it is possible to do so. Then multiplying the refund by an indefinite number of future years might make the effort worthwhile. The shares in question are held because I like (or liked) the businesses, not for the income; indeed a high yield detracts from the attraction of a holding, better for the company to reinvest the money at a higher ROR than I could achieve especially after paying tax on the distributed money.

Bluefin: Yes I will try to do this.

Another question: In Form 5000 Part V, does the "Paying Institution" mean the company that paid the dividend, or the broker holding my shares that directly credited the funds to my broker account? The company has no record of me, with shares held in custodian account.

The whole withholding tax process is a pain in the ass, none of the parties involved in paying me a dividend has any incentive to assist my paying only the tax legally due and no more; not the company, not the custodian, not the broker, nor either of the tax authorities. Give me the W-8BEN system any day!

I read somewhere there is a European-level initiative to sort out the systemic problem of irrecoverable excess withholding taxes.

I completely feel the same way in relation to euro dividends..

Even though I'm technically a Paye tax payer, would it make sense to get someone from taxassit or equivalent to submit your tax return and chase taxes from revenue and euro withholding taxes?

Bluefin, I think you would find that using Taxback (say) to do this for you would not be economic unless the figures are quite substantial. There is a US company that quoted me, but unless individual dividends are in the multi thousands it would not be economic. The sad fact is that everyone in the chain of actors, except the recipient at the end of the chain, is incentivised not to provide any assistance about the situation.

Maybe this is a business opportunity for some entrepreneurial & multilingual software developer.