The France-Pakistan tax treaty: a 10% cap on interest, royalties and technical services

The France-Pakistan tax treaty, signed on June 15, 1994, caps withholding tax on interest, royalties, and technical service fees at 10% of the gross amount. For dividends, the cap is 10% or 15% depending on the holding period. It applies only to income tax; there are no provisions regarding inheritance tax.

A text from 1994, the MLI since 2021

The convention, accompanied by a protocol, entered into force on September 1, 1996 and applies in France to sums paid from January 1, 1997. The BOI-ANNX-000306 list (April 29, 2026) classifies it among the conventions on income, without an amendment.

It is modified by the multilateral convention (MLI): according to the BOI-ANNX-000511 list, the effects in France begin on January 1, 2022, for withholding taxes and on October 1, 2021, for other taxes. A clause preceding Article 1 denies the benefit of the convention if one of the main objectives of an arrangement is to obtain it.

Maximum deductions and key rules

Residence, earnings and pensions

Residence. Article 4 § 2 distinguishes between natural persons resident in both States: permanent home, center of vital interests, habitual residence, nationality, then agreement of the competent authorities.

Capital gains. Article 14 applies to real estate (paragraph 1), companies whose value derives more than 50 % from real estate (paragraph 2, value assessed over 365 days), and participation of at least 25 % in a company resident in a State (paragraph 3). The transfer of such participation is taxable in the State of residence of the company whose shares are transferred.

Social security pensions. Article 19, paragraph 2, addresses them separately: they are taxable in the State where the statutory regime applies. Income not covered by the preceding articles falls under the jurisdiction of the State of residence (Article 23).

Eliminating double taxation in France

Article 24, paragraph 1, provides for a tax credit against French tax, not exceeding the French tax corresponding to the income in question. For the income referred to in particular in Articles 10, 11, 12, and 13, it corresponds to the tax paid in Pakistan.

Royalties of €60,000: numerical example (fictitious profile)

Situation. A French company, fictitious profile, pays €60,000 in gross royalties to a Pakistani company.

Issue. What is the maximum tax France can withhold at source?

Strategy. Article 12 § 2 ceiling, after verification of the qualification of the payment, the beneficial owner and the clause of entitlement to benefits.

Result. The limit is €6,000 (10 tax units per 13 days of €60,000). For €80,000 of gross dividends: €8,000 to 10 tax units per 13 days (365-day holding period met) or €12,000 to 15 tax units per 13 days. These are maximums, not the tax due.

What this page does not cover

It does not address real estate income (Article 6), the exemptions of Article 11, or Pakistani tax rates. Article 27, paragraph 3, addresses wealth taxes only for the purpose of information exchange.

What changes depending on your situation

• Your residence as defined in the agreement.
• The nature of the income: dividend, interest, royalty, technical service, pension, salary.
• The holding period and its duration, for dividends.
• The days spent in each state during the fiscal year.

An article should be read in light of the facts in your case; no result is guaranteed in advance.