Details of the newincome and capitaltax treaty and protocol between France and the United Kingdom, signed on 19 June 2008, have become available. The treaty was concluded in the French and English languages, each text having equal authenticity. The treaty generally follows the OECD Model Convention.
The maximum rates of withholding tax are:
|-||15% on dividends in general. Dividends are, however, exempt if the beneficial owner controls, directly or indirectly, at least 10% of the capital of the company paying the dividends;|
|-||0% on interest; and|
|-||0% on royalties|
Deviations from the OECD Model include:
|-||the treaty contains a provision on taxation of dividends distributed by real estate investment trusts (REITs), inspired by the2008 Draft OECD Model, which provides that distributions from REITs to an investor, who owns at least 10% of the capital of the REIT, are not eligible for any limitation on the tax applied at source on distributions to the residents of the other contracting state and may, consequently, be taxed at the rate provided for by the domestic law of the contracting state in which such dividends arise (Art. 11 Dividends);|
|-||gains from the alienation of any property shall be taxable only in the contracting state of which the alienator is a resident, unless specifically provided otherwise. The foregoing provisions shall not, however, affect the right of a contracting state to levy according to its law a tax chargeable in respect of gains from the alienation of any property on a person who is, and has been at any time during the previous 6 fiscal years, a resident of that contracting state or on a person who is a resident of that contracting state at any time during the fiscal year in which the property is alienated (Art.14 Capital Gains);|
|-||the treaty includes a provision on arbitration, generally following the 2008 Draft OECD Model (Art. 26 Mutual Agreement Procedure);|
|-||for the purposes of the assessment in respect of the capital tax (l'impôt de solidarité sur la fortune) of an individual who is a resident of France and is a national of the United Kingdom without being a national of France, property situated outside France which he owns on 1 January in each of the 5 calendar years following that in which he became a resident of France shall not be included in the basis of assessment of the tax pertaining to each of those 5 years. If that person loses the status of resident of France for a period of at least 3 years, and then becomes a resident of France again, property situated outside France which he owns on 1 January in each of the 5 calendar years following that in which he became a resident of France again shall not be included in the basis of assessment of the tax pertaining to each of those 5 years (Art. 29 Miscellaneous Rules);|
|-||the treaty contains rules on computation of income for the concessionaires (The Channel Tunnel Group Limited and France-Manche SA) and allocation of taxing rights between the two states in respect of that income (Art. 9 Channel Tunnel);|
|-||the treaty contains an article on taxation of teachers' and researchers' income (Art. 20 Teachers and Researchers); and|
|-||the treaty contains an article on offshore activities (Art. 22 Offshore Activities).|
Both states generally provide for the credit method to avoid double taxation. In addition, the United Kingdom grants an indirect tax credit for the underlying corporate tax paid by a French company in which the UK company controls, directly or indirectly, at least 10% of the voting power.