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8.3. Exit Strategies

France has a tax treaty network spanning more than 100 countries, often providing for reduced withholding tax rates. Also, the EU Parent-Subsidiary and Interest and Royalty Directives provide nil withholding tax on qualifying dividends and royalties (interest being largely exempt from withholding tax under domestic law). Both routes, can, however, be challenged by the tax administration if they feel that structure was put in place to benefit from a lower or nil rate which would otherwise not apply. The fact that interest income is now largely exempt from withholding tax under domestic law, is tempered by the increased limitations to related interest deduction at the level of the payer. Finally, increased withholding taxes (75% ) have been put in place for payments to non-cooperative jurisdictions (See Sec. 5.5.6.), although ways exist to circumvent them.