Dividends paid to a non-resident: the 12.8% withholding tax (%), instructions for use

When a French company subject to corporation tax distributes a dividend to a shareholder whose tax residence is outside France, withholding tax is levied at the time of payment. The rate is 12.8% when the beneficial owner is an individual, for dividends paid from January 1, 2018. The rate increases to 75% for dividends paid outside France in a non-cooperative state or territory, subject to the exceptions provided for in the legislation. Tax treaties may modify the scope and the rate.

This page deals with dividends paid by a French company to an individual residing outside of France. It does not cover the tax rate applicable to shareholder companies, the rates of each tax treaty, the list of non-cooperative jurisdictions, or social security contributions. It also does not cover the tax due in your country of residence. These points should be verified with the tax authorities according to your specific situation.

The principle: who is affected, and what is it about?

The withholding tax is provided for by Article 119 bis, 2 of the French General Tax Code (CGI). According to the French Tax Administration's Official Bulletin (BOFiP) (BOI-RPPM-RCM-30-30), income distributed by companies subject to corporation tax is subject to withholding tax. This applies to the extent that the income is paid to individuals who are not tax residents of France (BOI-RPPM-RCM-30-30-10-10).

The scope is based on the headquarters of the distributing company. Companies headquartered abroad are excluded from this text.

The rates

The rate of 12.8 % applies to distributed products paid for from 1 January 2018. The version of the BOFiP read on 17/10/2026 is in force since 29/06/2022.

The rate of 75 %

The BOFiP (French Official Tax Bulletin) sets out two limitations. The increased rate does not apply if the payer proves, by any means, that the distributions in that State or territory are neither intended nor intended to facilitate, for the purpose of tax evasion, their location in such a State or territory. And if the beneficial owner is domiciled or established in France, the withholding tax remains due at the increased rate. If the beneficial owner is a resident of a State bound to France by a tax treaty, the treaty may be invoked.

The beneficial owner

The tax rate is determined based on the beneficial owner of the income, including at the end of a chain of financial intermediaries. The BOFiP (French Official Tax Bulletin) provides a practical example: when the entity established in France making the payment is unable to identify the beneficial owner, and the applicable tax advantages are not intended to apply, the rate applicable to legal entities is applied by default. If the rate of 12.8% (%) has been incorrectly applied instead of the legal entity rate, the paying institution must make a supplementary payment, corresponding to the difference between these two rates, within three months of the end of the month of distribution.

Tax treaties

The BOFiP (French Official Tax Bulletin) states that the provisions of tax treaties "frequently affect the scope and rate of withholding tax" (BOI-RPPM-RCM-30-30-10-50). To benefit from this, the individual must prove their tax residence in the country concerned. The required supporting documents vary depending on the treaty.

The agreed rate can be obtained as soon as payment is made, under the conditions set out in practical doctrine (BOI-RPPM-RCM-30-30-10-60). The doctrine on procedures (BOI-INT-DG-20-20-20-20) distinguishes two approaches:

• the simplified procedure The shareholder presents a certificate of residence before payment is made, and the agreed rate is applied from the date of payment. The certificate is valid for one year, corresponding to the calendar year of its issuance; ;
• the normal procedure Without a certificate on the payment date, the withholding tax is levied at the internal rate. The contractual rate is then only obtained through deduction or reimbursement.

This BOFiP document dates from 2012 (version of 12/09/2012). Check the forms and deadlines on the current government websites before taking any action. The rates for each agreement are not listed here: they depend on your country of residence and your individual circumstances.

Who retains, when, and how

• Expiry date. The withholding tax is due upon actual receipt of income (BOI-RPPM-RCM-30-30-10-40).
• Base. It applies to the gross amount disbursed by the company (BOI-RPPM-RCM-30-30-10-30).
• Indebted. The withholding tax is deducted and paid to the Treasury by the entity established in France that makes the payment, known as the paying institution. This entity is legally liable for the withholding tax. The BOFiP (Official Bulletin of Public Finances) lists local authorities responsible for collecting income and professional intermediaries (BOI-RPPM-RCM-30-30-10-70).
• Declaration and payment. The monthly deduction is declared electronically using form 2777-SD. It is paid within fifteen days following the monthly reference period, via mandatory electronic payment.

What the withholding tax settles for the shareholder

For an individual, the withholding tax under Article 119 bis, 2 of the French General Tax Code (CGI) exempts taxpayers domiciled outside France from income tax due on amounts subject to this withholding (BOI-RPPM-RCM-30-30-10-80). This effect applies to amounts that have actually been withheld.

This page does not address the tax that your country of residence may levy on the same dividend. This depends on that country and the applicable tax treaty.

Numerical example (fictitious profile)

Situation. Claire, a fictitious individual, has left France and her tax residence is abroad. She holds shares in a French simplified joint-stock company subject to corporation tax. The shareholders' meeting decides to pay her a gross dividend of €40,000.

Assumptions of the example. Claire is the beneficial owner of the dividend. The payer is established in France. The proceeds are not paid in a non-cooperative state or territory. No treaty rate is invoked. The €40,000 dividend is the gross amount paid out by the company.

Issue. What amount must be withheld at source, which Claire receives, and what must the payer do next?

Result.

The payer declares the €5,120 on form 2777-SD and pays it within fifteen days following the monthly reference period.

To measure the difference in mechanism: if the same dividend of €40,000 was paid outside France in a non-cooperative state or territory, without proof ruling out the increased rate and excluding the exclusion provided for in point 2 of paragraph 2 bis of Article 238-0 A of the French General Tax Code, the withholding tax at the rate of 75% would be €30,000, i.e. €24,880 more.

This profile is fictitious. Social security contributions and income tax in your country of residence are not included in this calculation. The figures illustrate the mechanism. They do not reflect your specific situation.

What changes depending on your situation

• Your beneficial ownership status : natural person, or intermediary company, or chain of intermediaries.
• The place of tax residence : outside of France, and in a State linked or not to France by a convention.
• The place of payment : a payment outside of France in a non-cooperative state changes the rate.
• The applicable convention : the rate and supporting documents vary according to the agreements.
• Issuance of a certificate before payment : it determines the procedure, simplified or normal.
• The headquarters of the company that distributes : in France, or abroad, in which case the company is excluded from this text.

The rule depends on your situation. No results are guaranteed.