The France-Bosnia-Herzegovina tax treaty: a 1974 text, dividends at 5 % or 15 %

The official list of agreements mentions, for Bosnia and Herzegovina, only the text concluded in 1974 with Yugoslavia, confirmed by an exchange of letters in 2003. This text caps dividends at 5 or 15 13T and reserves interest and royalties for the beneficiary's country of residence. This fact sheet summarizes the articles we have read and explains what it does not cover.

A 1974 agreement signed with Yugoslavia

The income convention was signed in Paris on March 28, 1974, and entered into force on August 1, 1975. An exchange of letters from 2003 confirms that it continues to bind France and Bosnia and Herzegovina. The text itself refers to Yugoslavia.

The convention is amended by the multilateral convention (MLI). According to the BOI-ANNX-000511 list, the effective date is set at January 1, 2021, for withholding taxes and at July 1, 2021, for other taxes. The consolidated text adds a clause: a benefit of the convention is denied if one of the main purposes of an arrangement was to obtain it.

Withholding taxes in a table

Interest and royalties are subject to exceptions: permanent establishment or fixed base, and special relationships between the parties. The BOFiP (French Official Tax Bulletin) specifies that royalties of French origin paid to a resident of Bosnia and Herzegovina are not subject to the withholding tax under Article 182 B of the French General Tax Code.

Employees: 183 days in the fiscal year

The exception in Article 15 applies if three conditions are met: a stay in the other State not exceeding a total of 183 days during the relevant tax year, an employer who is not a resident of the other State, and an expense not borne by a permanent establishment or fixed base. The text refers to the tax year, not a twelve-month period.

Proof of residence: forms 5000 to 5003

To qualify for the reduced rate or exemption, the beneficiary must prove their residence in Bosnia and Herzegovina (Article 4) using form 5000, stamped by the Bosnian tax authorities. They must also attach appendix 5001 for dividends, 5002 for interest, or 5003 for royalties. The income must not be attributable to a permanent establishment in France.

For a person resident in both States, Article 4 considers in order the permanent home, the center of vital interests, the habitual residence, then the nationality; if nationality does not decide, the competent authorities decide by mutual agreement.

Avoiding double taxation: exemption, except for three incomes

Article 23 stipulates that France generally exempts income taxable in Bosnia and Herzegovina. Three types of income are exceptions: dividends (Article 10), directors' fees (Article 16), and income of artists and athletes (Article 17). For these, a tax credit equal to the tax paid in Bosnia and Herzegovina is granted, capped at the corresponding French tax. Salaries (Article 15) are not included in this list.

What this sheet does not cover

The convention only addresses income tax: neither wealth nor inheritance. Capital gains on securities, the mutual agreement procedure, and Bosnian tax rates are not detailed. The convention's status with regard to state succession is not established beyond the 2003 exchange of letters.

What changes depending on your situation

• Your residence as defined in Article 4, and not just your nationality.
• The nature of the income and its classification: dividend, interest, royalty, salary.
• Your participation in the capital, for the rate of 5 % on dividends.
• The existence of a permanent establishment or a fixed base.

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