The 1987 France-Quebec tax agreement, amended in 2002: what the text says

The official list of tax treaties treats Quebec separately: a "tax agreement" signed on September 1, 1987, amended by a clause dated September 3, 2002. It covers income tax and wealth tax. Three points stand out: pensions paid for previous employment are taxable only in the state from which they originate, dividends of French origin are capped at 5 or 15 %, and the agreement can be terminated by giving notice no later than June 30. The France-Canada tax treaty is discussed on a separate page.

A text from 1987, an amendment that came into force in 2005

According to the BOFiP (version of 12/09/2012), the agreement was signed in Quebec City on September 1, 1987, and entered into force on September 19, 1988. The amendment was signed in Paris on September 3, 2002, and entered into force on August 1, 2005. According to the BOFiP, Article 29 of the amended agreement provides for its application:

• for taxes collected by withholding at source, to any sum paid from 1 August 2005 onwards; ;
• for income taxes not collected by withholding at source, to income relating to any calendar year from 2006 or to any financial year beginning on or after August 1, 2005; ;
• for other taxes, to those whose triggering event occurs from 1 January 2006.

The tax administration's page dedicated to the agreement indicates a last update on 18/01/2022.

Taxes concerned and territorial scope

Article 2 concerns income and wealth taxes. For France, the list includes income tax, corporation tax, payroll tax, and the wealth tax; the real estate wealth tax is not mentioned, and its application is not addressed here. Inheritance taxes are only relevant to Articles 4, 22, 24, and 25; the administrative list categorizes the agreement under "IR – IF," excluding inheritances and gifts. Article 27 concerns, on the French side, the European and overseas departments and Saint-Pierre-et-Miquelon.

Maximum deductions and key rules

Resident: the tie-breaker under Article 4

For a natural person resident in both States, Article 4 § 2 considers in order the permanent home, the center of vital interests, the habitual residence, then the nationality; failing that, the competent authorities decide by mutual agreement.

Pensions and annuities: the state of origin

Article 18, paragraph 1, stipulates that pensions and similar allowances arising from one Party and "paid in respect of previous employment to a resident of the other Contracting Party" may be taxed only in the Contracting Party from which they originate. Annuities arising from one Party and paid to a resident of the other "are taxable in the first-mentioned Party" (paragraph 3). Alimony payments are taxable only in the State of the recipient (paragraph 4).

Capital gains: former residents

Article 13 § 5 allows a State to tax the gain of a former resident, subject to conditions of nationality or residence of at least ten years and residence during the five years preceding the transfer.

Amicable procedure and denunciation

The taxpayer must notify the competent authority of their State of residence within two years of the first notification of the contested measure (Article 24 § 1). Each party may give notice of denunciation no later than June 30 of any calendar year after 1987 (Article 30 § 1).

Limitations of this sheet

It does not address permanent establishments, Articles 6 to 9, pension funds, arbitration, the exchange of information, or Article 22 beyond the principle of the French tax credit. Quebec law should be reviewed with a local professional. Your residence as defined in Article 4, the nature of the income, and your capital ownership (5 % or 15 %) determine the applicable rule.