The France-Libya tax treaty: dividends capped at 5 or 10 %, income only

The France-Libya convention caps the tax levied by the state of source at 5% of the gross amount for dividends paid to a company that directly or indirectly holds at least 10% of the capital, and at 10% in other cases. It applies only to income tax: not to wealth or inheritance taxes.

A text signed in 2005, in force since July 1, 2008

The convention was signed in Paris on December 22, 2005. It entered into force on July 1, 2008, and applies to withholding taxes from January 1, 2009 (BOFiP, BOI-INT-CVB-LBY). The administrative list (BOI-ANNX-000306, dated April 29, 2026) classifies it among the conventions on income, without amendment. Libya is not included in the list of conventions modified by the multilateral convention (BOI-ANNX-000511).

Libya: Maximum Detentions and Key Rules

Royalties: a ceiling of 10 % that the administration considers irrelevant

Paragraph 3 of Article 13 stipulates that the tax cannot exceed 10% of the gross amount of the royalties. However, the BOFiP (French Official Tax Bulletin) indicates that, under the most-favored-nation clause of the convention, this withholding tax is no longer applicable since the Libya-United Kingdom convention signed on November 17, 2008. According to this note, the royalties are taxable only in the beneficiary's country of residence.

Residence (Article 5) and employees (Article 16)

Article 5 defines as a resident any person subject to taxation in the State under its legislation. For an individual resident in both States, it applies the following criteria in order: permanent home, center of vital interests, habitual residence, nationality, and then the agreement of the competent authorities.

For employees, Article 16 stipulates a stay not exceeding a total of 183 days during any twelve-month period beginning or ending in the relevant tax year. Two other conditions apply: the employer is not a resident of the other State, and the remuneration is not borne by a permanent establishment there.

Eliminating double taxation in France

Article 23 distinguishes between two cases. According to (a), for income not mentioned in (b), the credit is equal to the amount of French tax corresponding to that income, provided that the resident is subject to Libyan tax. According to (b), for income referred to in particular in Articles 11, 13, and 14, paragraph 1, the credit is equal to the Libyan tax, capped at the amount of French tax corresponding to that income. The text specifies that the Libyan tax is not deductible from this income, which is not exempt from corporate income tax.

Dividends of €40,000: a numerical example (fictitious profile)

Situation. A Libyan company, fictitious profile, receives €40,000 gross in dividends from a French company in which it holds 12 % of the capital.

Issue. She wants to know the maximum amount of tax that France can withhold.

Strategy. It applies Article 11 § 2 a), then verifies the ownership of the capital, direct or indirect, and the status of beneficial owner.

Result. The ceiling is €2,000 (5 % of €40,000). For a beneficiary in the other case, it would be €4,000 (10 %). This calculation gives the maximum allowed by the agreement, not the tax actually due.

What the page doesn't say about Libya

The Libyan tax rates, the amicable procedure, the length of the notice period for termination, and the terms of the most-favored-nation clause are not addressed.