France-India Convention: What the 1992 text stipulates

The France-India Convention was signed in Paris on September 29, 1992, and has been in force since August 1, 1994. While the text of the convention caps dividends at 15,000 1/30 of the capital, the French tax authorities interpret the protocol, through the most-favored-nation clause, as allowing a rate of 10,000 1/30 of the capital, or even 5,000 1/30 of the capital for a company directly holding at least 10,000 1/30 of the capital. For employees, the 183-day threshold is calculated per fiscal year. The convention does not address inheritance.

This page reads the consolidated text published by the French administration and the BOFiP commentary. It says nothing about Indian law itself.

A 1992 text, a protocol that weighs on rates, the MLI in 2020

The convention. Signed on September 29, 1992, with a protocol forming an integral part thereof, it entered into force on August 1, 1994. It repeals the convention of March 26, 1969. The administrative list of conventions classifies it as relating to income tax and wealth tax («IR – IF»), without amendment.

The MLI. The multilateral convention amends it. Its effects begin on January 1, 2020 for taxes withheld at source and on April 1, 2020 for other taxes (BOI-ANNX-000511, dated April 29, 2026). A consolidated version is available.

The taxes in question (Article 2). On the French side: income tax, corporation tax, and wealth tax. The application of the convention to the IFI (French wealth tax) is not addressed here.

Maximum deductions and key rules

The most-favored-nation clause: two interpretations, one point to be validated

Point 7 of the Protocol provides that lower rates or narrower scopes granted by India to an OECD Member State, in a treaty signed after 1 September 1989, "shall also apply under this Convention".

The BOFiP commentary (BOI-INT-CVB-IND, version of November 4, 2016) derives the following rates. Dividends: the rate of 15 % is "replaced by that of 10 % provided for by the tax treaty concluded by India with Germany," and by 5 % if the beneficiary is a company that directly holds at least 10 % of the capital. Interest under Article 12 § 2 b): 15 % replaced by 10 %. Royalties and remuneration under Article 13: 20 % replaced by 10 %.

The text therefore states 15 %; the French administration's commentary indicates 10 % or 5 %. We have not consulted any source indicating the rate that the Indian administration actually uses. We are not making a definitive judgment: the rate to be applied to a specific payment should be confirmed with a local professional before payment.

Who is a resident? Article 4

Paragraph 2 addresses the case of a person resident in both states. It considers, in order: their permanent home; if they have one in both states, their center of vital interests; if they cannot determine a center or home, their habitual residence; then their nationality; and finally, the agreement of the competent authorities. French tax domicile is addressed on our page concerning Article 4 B of the French General Tax Code (CGI).

Interest, royalties and technical services

For interest, Article 12 § 2 a) provides for 10 % for certain loans, which the text lists; b) sets 15 % "in all other cases".

Article 13 goes further than traditional royalties. It also covers remuneration for technical services, i.e. management activities, of a technical or advisory nature (§ 4), and remuneration for the use of equipment (§ 5), with a single ceiling of 20 % of the gross amount (§ 2).

Capital gains: the threshold of 10 %

Article 14 refers capital gains on real estate to the State where the property is located. It also applies to shares or rights whose value derives, to the extent of more than 50 %, from real estate located in the other State within the 365 days preceding the sale (§ 4): these gains are taxable in that other State. The text provides an exclusion for buildings used in the operation of the company: it must be read in its entirety before any application. For shareholdings of at least 10 % in a company, the gain is taxable in the State of residence of that company (§ 5).

Employees: 183 days in the fiscal year

Article 16 § 1 reserves taxation to the State of residence, unless the employment is exercised in the other State. § 2 sets out an exception subject to three cumulative conditions: a stay not exceeding a total of 183 days "during the tax year concerned", an employer who is not a resident of the other State, and an expense not borne by a permanent establishment or a fixed base.

The relevant period is the fiscal year, not a period of twelve consecutive months. We haven't consulted the Indian fiscal year calendar: two closely spaced missions only count towards the total if they fall within the same fiscal year.

Pensions: the state of residence imposes

Article 20, paragraph 1, states that non-public annuities and pensions "are taxable only in the first State," that of which the beneficiary is resident. The treatment of public pensions is governed by Article 19, which is not detailed on this page.

Wealth and elimination of double taxation

Article 24 § 1 assigns wealth consisting of real estate to the State where it is located.

For the elimination of tax liability, Article 25 § 1 a) stipulates that income from Indian sources is taken into account for the calculation of French tax, that "Indian tax is not deductible from this income," and that a tax credit is granted. For income covered by Articles 9 § 2, 11, 12, and 13, this credit corresponds to the tax paid in India, without, according to the text, exceeding the amount of French tax corresponding to this income. Our page on tax credits and the effective tax rate details the mechanism.

Inheritance and gifts: the convention does not address these.

The administrative register for India only lists "IR – IF": it makes no mention of inheritance or gifts. Transfers of assets therefore depend on the domestic law of each state, which this page does not address.

Other articles and what this page does not cover

Article 28 governs the exchange of information between the competent authorities. This page does not detail Article 3, permanent establishments, corporate profits, public remuneration, or the payment to the French Treasury provided for in Article 11 § 3. It says nothing about the Indian definition of residence or the applicable Indian domestic tax rates.

Dividends and royalties from Indian sources: numerical example (fictitious profile)

Situation. A resident of France, fictitious profile, receives €100,000 in gross dividends from an Indian company and invoices €40,000 for technical services to an Indian entity (assumptions).

Issue. He wants to know the maximum withholding tax according to each of the two readings, text and commentary.

Strategy. He applies Article 11 § 2 and Article 13 § 2 of the text, then the BOFiP rates from point 7 of the protocol, and he has the rate retained validated by the Indian administration.

Result. According to the text: €15,000 in dividends and €8,000 in benefits, totaling €23,000. According to the BOFiP (French Official Tax Bulletin): €10,000 and €4,000, totaling €14,000. The difference is €9,000. If the dividend recipient were a company directly holding at least 10% of the capital, the commentary indicates 5% of the capital: €5,000.

This profile is fictitious. The calculation does not take into account French tax, the Article 25 credit, or the classification of the service.

What changes depending on your situation

• Your residence as defined in the agreement.
• The nature of the income: dividend, interest, royalty, remuneration for technical services, salary, pension, gain.
• Your status as an individual or a company, and your percentage of ownership.
• The number of days spent in India in each fiscal year.
• The rate that the Indian administration applies to your payment.

No outcome is guaranteed, and Indian law is validated with local advice.