France-Japan Convention: Royalties, dividends and holding thresholds

The France-Japan Convention was signed in Paris on March 3, 1995, and amended by an addendum dated January 11, 2007, which entered into force on December 1, 2007. It does not provide for any withholding tax on royalties: they are taxable only in the beneficiary's country of residence. Dividends are capped at 5 or 10 13-day periods, depending on the holding period, subject to the non-taxation provision in paragraph 3 of Article 10 for a French payer (see below). For employees, the 183-day threshold is calculated over any twelve-month period beginning or ending during the relevant tax year. The convention does not address inheritances.

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

A 1995 agreement, an amendment in 2007, the MLI in 2019

The convention. Signed in Paris on March 3, 1995, with a protocol forming an integral part thereof, it entered into force on March 24, 1996 and applies from January 1, 1997. It replaces the convention of November 27, 1964.

The addendum. Signed on January 11, 2007, with an exchange of letters, it entered into force on December 1, 2007. Its provisions apply in France from January 1, 2008. The administrative list of conventions includes it under the heading "A and EDL January 11, 2007". The consolidated text does not specify which articles it amended; this page does not either.

The MLI. The multilateral convention applies to this text since January 1, 2019 for taxes withheld at source and since July 1, 2019 for other taxes (BOI-ANNX-000511, of April 29, 2026).

The taxes in question (Article 2). In France: income tax, corporation tax, the annual flat-rate corporate tax, payroll tax, CSG and CRDS. In Japan: income tax, corporation tax and local taxes on residents.

Maximum deductions and key rules

Who is a resident? Article 4

Paragraph 1 defines a resident as any person who, "under the laws of that State, is liable to tax in that State." Paragraph 2 addresses the case of a person resident in both States: permanent home, center of vital interests, habitual residence, nationality, and then agreement of the competent authorities. The text ends at point (d).

Japanese law itself defines who is a resident: our page on life in Japan presents the three statuses.

Dividends: six months of holding

Article 10, paragraph 2(a), sets a threshold of 5,% of the gross amount if the beneficial owner is a company that has held, directly or indirectly, throughout the six-month period ending on the date the dividend rights are determined, at least 10,% of the capital of the paying company when the latter is resident in France, or at least 10,% of the voting rights when it is resident in Japan. Paragraph (b) sets a threshold of 10,% in all other cases.

Paragraph 3 goes further for a French payer: dividends are not taxable in the country of the paying company when the beneficiary is a company that holds at least 15% of the capital for six months. The thresholds applicable to a Japanese payer are different; this page does not include them, and the text should be read in its entirety before any calculations.

Interest and royalties: 10 % and zero

Article 11 § 2 caps the withholding tax at 10 % of the gross amount of interest.

Article 12, paragraph 1, is clearer: royalties arising in one State and whose beneficial owner is a resident of the other State "shall be taxable only in that other Contracting State." The text does not specify any withholding tax rate.

Capital gains: two cumulative thresholds

Article 13, paragraph 2(a), subjects capital gains on shares of a company resident in another state to taxation in the state of the company's residence when two conditions are met: the transferor holds at least 25 % of the capital at some point during the relevant tax period, and its transfers total at least 5 % of the capital. Paragraph 3 applies to entities that derive more than 50 % of their value from real estate at any time during the 365 days preceding the transfer. Paragraph 6 reserves all other capital gains for taxation in the state of residence of the transferor.

Missions and secondments: the 183-day countdown

Article 15, paragraph 1, reserves taxation to the State of residence, unless the employment is exercised in the other State. Paragraph 2(a) provides an exception: the stay must not exceed a total of 183 days "during any twelve-month period commencing or ending in the relevant tax year." Conditions (b) and (c) are added: remuneration paid by an employer who is not resident in the other State, the cost of which is not borne by a permanent establishment that the employer has there.

The text refers to the twelve-month period that begins or ends during the relevant fiscal year; it must be read in its entirety before any calculation.

Pensions

Article 18 § 1, subject to Article 19 § 2, states that pensions and similar remuneration paid in respect of previous employment "are taxable only in that Contracting State", the one of which the beneficiary is a resident.

Eliminating double taxation: Article 23

For France, Article 23 § 1 a) stipulates that the beneficiary is entitled to a tax credit against French tax. The specific details, depending on the type of income, are detailed in the text; our page on tax credits and the effective tax rate explains the mechanism.

Right to benefits: Article 22A

Article 22A § 1 reserves certain advantages for a resident who is an "eligible person" within the meaning of paragraph 2. The criteria of paragraph 2 are read in the text, with the facts of a specific case.

Inheritance and gifts: the convention does not address these.

The administrative register for Japan only lists "IR" (Inheritance Tax): there is no mention of inheritance or gifts. Japanese inheritance law is explained on our page about life in Japan.

What this page does not cover

This page does not detail the protocol, the arbitration provided for by the MLI, the exchange of information, or the application of the convention to the IFI. It says nothing about the rates of Japanese domestic law.

Dividends, capital gains and missions in Japan: a numerical example (fictitious profile)

Situation. A French company (fictitious profile) receives €300,000 in gross dividends from a Japanese company. It has held 12 % of the voting rights for more than six months. It also sells some of its shares in another Japanese company in which it holds 30 % of the capital (assumptions).

Issue. She wants to know the maximum withholding tax on dividends and whether the threshold of Article 13 § 2 a) has been reached.

Strategy. It applies Article 10 § 2 a) and b) to dividends, then the two conditions of Article 13 § 2 a) to the transfer.

Result. At 12 voting rights (%), the rate of 5% applies: a maximum of €15,000. With 8%, the threshold of 10% would not be reached, the rate would be 10%, and the withholding tax would be €30,000, a difference of €15,000. For the sale, a sale of 4% of the capital does not meet the 5% threshold; a sale of 6% meets both conditions, with a holding of 30%.

Second case: an employee residing in France, employed by a French company, makes two trips to Japan: 95 days and 85 days, within the same twelve-month period beginning or ending during the relevant tax year (hypothetical). The total is 180 days: the 183-day threshold is not exceeded, with a margin of 3 days. A third trip of 5 days would bring the total to 185 days: the threshold would be exceeded by 2 days. Conditions b) and c) of Article 15 § 2 remain to be verified.

This profile is fictitious. The calculations do not take into account French taxation, the credit under Article 23, or the other provisions of Article 10 or Article 22A.

What changes depending on your situation

• Your residence as defined in the agreement.
• The category of income received: dividend, interest, royalty, salary, pension or capital gain.
• Your status as a company or individual, your percentage of capital or voting rights, and the holding period.
• The number of days spent in Japan in each twelve-month period.
• Your situation with regard to the right to benefits (Article 22A).

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