France Tax Treaties with China

Email: par4ww@evershinecpa.com
Manager Zhu, speak in French English and Chinese

CN-Q-10:
中國母公司在法國是否可以依DTA申請沒有常設機構(PE)下零稅率?
China Parent Company, can apply for zero tax rate without PE under DTA in France?

CN-A-10:
Yes.
China has DTA with France, and if China Legal Resident company is without PE (Permanent Establishment), it will be redeemed as “non-France Domestic Sourced Income”.
That means France will levy zero-tax.
However, China Legal Resident company still needs to send zero-tax application to France Tax Bureau for being approved.

CN-Q-20:
中國母公司在法國設立了法國子公司， 中國母公司替子公司服務收入能否申請零稅率?
When China Parent Company as an Investor, setup a France subsidiary, and provide services from China to France Subsidiary, can apply for zero tax rate without PE under DTA in France?

CN-A-20:
According to DTA Article 5 item 7, A France subsidiary will not be treated as PE of China Parent company as an investor because it is a separate legal entity.
That means if a France Subsidiary pay a service fee to China Parent Company through a service contract signed between the subsidiary and China Parent company
as an investor, China Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by France Tax Bureau.

CN-Q-30:
法國依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for France to apply for zero tax rate under DTA without PE?

CN-A-30:
Before payment for crediting, fill up Form 5000-EN (Certificate of Residence) (Valid for one year).
Enclose either Form 5001 (Dividends), Form 5002 (Interest), Form 5003 (Royalties) along with Form 5000.
Send the above forms to tax authorities of your country of residence for certifying.
Upon receipt of your certified forms, send them to the French Tax Authorities at “Foreign Business Tax Service – 10, rue du Center, TSA 20011, 93465 Noisy le Grand Cedex, France”

Deadline for claims:-
Unless otherwise stipulated in the tax treaty, French law stipulates that, in order to be valid, claims must be received by the French authorities by 31 December of the second year following the year in which the income was paid.

CN-Q-40:
中國母公司有法國來源所得的各項所得扣繳稅率為何?
When China Resident company has France domestic sourced income, what are the withholding tax rates for various incomes in France?

CN-A-40:
China has DTA with France, and if you are with PE (Permanent Establishment) in France, your income will be considered as France’s domestic sourced income.
As for levying Tax Rate, please be aware:
if France Tax rate > DTA Rate, adopt DTA Rate; if France Tax rate < DTA Rate, adopt France Rate.

If DTA is applied, the DTA rates between China and France are as below:

*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

CN-Q-50
當中國稅務居民有法國來源所得，依DTA優惠稅率申請的程序為何?
When China Tax Resident has France domestic sourced income, what is France’s application procedure based on the DTA preferential tax rate?

CN-A-50:
Before payment for crediting, fill up Form 5000-EN (Certificate of Residence) (Valid for one year).
Enclose either Form 5001 (Dividends), Form 5002 (Interest), Form 5003 (Royalties) along with Form 5000.
Send the above forms to tax authorities of your country of residence for certifying.
Upon receipt of your certified forms, send them to the French Tax Authorities at “Foreign Business Tax Service – 10, rue du Center, TSA 20011, 93465 Noisy le Grand Cedex, France”

Deadline for claims:-
Unless otherwise stipulated in the tax treaty, French law stipulates that, in order to be valid, claims must be received by the French authorities by 31 December of the second year following the year in which the income was paid.

Summary of TAX TREATY between France and CHINA

The Government of the French Republic and The Government of the People’s Republic of China concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 26 November 2013 and ineffective from 1 January 2015.

Permanent Establishment

Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:
* A place of management
* A branch
* An office
* A factory
* A workshop
* The furnishing of consultancy services through employees or other personnel for periods aggregating more than 183 days.

Withholding Tax

*Article 7 of DTA between France and China explained, France may not tax payments on business profits rendered by China corporations unless it is attributable to the permanent establishment situated in the relevant territory.

*In Article 10, dividends paid by a France Resident enterprise to China Resident enterprise, if the recipient is the beneficial owner of the dividends, the tax charged shall not exceed 5% if the beneficial owner is a company which holds directly at least 25% of the capital of the company paying the dividends.
In other cases, the withholding tax rate is 10%.

*Article 11 states that where the beneficial owner of the interest is a non-resident, shall be taxed in the territory in which it arises at the rate not exceeding 10% of the gross interest.

*Article 12 explained royalties means payment for the use of, or the right to use, any copyright of literary, artistic, or scientific work including cinematographic films, or films or tapes used for radio or television broadcasting, any patent, trademark, design or model, plan, secret formula, or processor for information concerning industrial, commercial, or scientific equipment, or for information concerning industrial, commercial, or scientific experience.

*Technical services are covered by the business profits in Article 7.
France corporations may not tax payments for technical services rendered by a China enterprise unless it is attributable to PE.

*A professional service or other activities provided by individuals of an independent character was explained in Article 14.
France corporations may not tax payments for professional service rendered by a China resident unless the China resident has a fixed place or stay in France for 183 days or more.
An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants.

Elimination of Double Taxation

Article 23 of the DTA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory.
It shall be credited against the tax levied in the first-mentioned territory on that resident.
However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 27 states that the competent authorities of the territories shall exchange such information relevant to the provision of this Agreement.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

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Manager Zhu, speak in French English and Chinese

or
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