The France-Iceland tax treaty: dividends at 5% or 15% of 13% of taxable income, MLI since 2020

The France-Iceland Convention of August 29, 1990, caps the withholding tax on dividends at 5% for certain companies and at 15% in other cases. Interest and royalties are taxable only in the recipient's country. This convention has been amended by the MLI since 2020.

A text from 1990, in force since June 1, 1992

The convention was signed in Reykjavik on August 29, 1990, with a protocol forming an integral part thereof. Law No. 91-1395 of December 31, 1991, authorized its approval, and Decree No. 92-549 of June 17, 1992, published it. It entered into force on June 1, 1992. Withholding taxes apply to income received from July 1, 1992, and other taxes to income from January 1, 1993 (Article 29).

List BOI-ANNX-000306 (April 29, 2026) classifies it with the sole mention "IR". According to list BOI-ANNX-000511 (April 29, 2026), the MLI takes effect in France on January 1, 2020 for taxes withheld at source and on July 1, 2020 for other taxes.

Maximum deductions and key rules

Dividends: the limit depends on deductibility in Iceland

Is the beneficial owner a company, other than a partnership, that directly holds at least 10 % of the capital of the paying company? The cap is then 5 % of the gross amount. It increases to 15 % for dividends distributed by an Icelandic company "insofar as these dividends are deductible from the taxable base in Iceland." In all other cases, the cap is 15 %.

Right to benefits: the MLI clause

The consolidated text denies the benefit of the convention for an element of income if one of the main objects of an arrangement was to obtain it, unless it is consistent with the object and purpose of the convention.

Earnings, salaries, pensions

For wages, Article 15 § 2 a) stipulates a stay not exceeding a total of 183 days "during any period of twelve consecutive months", with two conditions on the employer and the responsibility for the remuneration.

Article 18 § 1 reserves pensions to the State of residence. Article 22 is entitled "Pension contributions"; we have only read the first paragraph, which concerns contributions paid by or for a resident individual.

Residence and double taxation

For an individual resident in both States, Article 4, paragraph 2, considers the permanent home, then the center of vital interests, habitual residence, and nationality; for a company, the place of effective management. Article 23 sets forth a method common to both States: tax levied in the other State is not deductible from taxable income in the first.

What this page does not cover

It does not address the remainder of Article 23, denunciation, the IFI (French wealth tax), or Icelandic domestic law. The administrative list makes no mention of wealth or inheritance.

What changes depending on your situation

• The ownership of the beneficiary company, direct ownership, and whether or not the dividend is deductible in Iceland.
• The purpose of the arrangement, with regard to the clause on the right to benefits.
• Your residence as defined in Article 4.
• Your travel schedule.

No result is guaranteed in advance.