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5.5.1. General

A foreign company with no establishment or branch in France is liable only to withholding taxes on specified French-source income. Most withholding taxes are in full satisfaction of the tax liability. In limited cases (e.g. gains on immovable property), however, the withholding tax is only a prepayment towards the corporate income tax. Also, a 3% tax may be levied on the market value of immovable property owned in France by non-residents.

Subject to the exceptions provided by tax treaties, a non-resident company carrying on business activities in France is subject to tax on:

  • all French-source income and gains connected with the business activity;
  • all French-source passive income;
  • capital gains on immovable property in France;
  • capital gains on the disposal of shares forming part of a substantial interest (giving entitlement to more than 25% of the income rights in the entity whose shares are sold).

However, only the capital gains from assets which are effectively connected with the French activity are taxable.