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ARTICLE 21

Elimination of Double Taxation

(1) In the case of France, double taxation shall be eliminated as follows:

  • (a) Notwithstanding any other provision of this Convention, income that is taxable or taxable only in the Principality of Andorra under the provisions of the Convention shall be taken into account for the calculation of the French tax when it not exempt from corporation tax under French domestic law. In this case, the Andorran tax is not deductible from such income, but the resident of France is entitled, subject to the conditions and limits set out in (i) and (ii), to a tax credit on the French tax. The tax credit is equal to the following:
    • (i) for income not mentioned in point (ii), to the amount of French tax attributable to such income, provided that the recipient residing in France is subject to Andorran tax for such income;
    • (ii) for income subject to corporate income tax referred to in Article 7 and paragraph (2) of Article 13 and for income referred to in Article 10, Article 11, Article 12, paragraph (1) of Article 13, paragraph (4) of Article 14, Article 15, and paragraphs (1) and (2) of Article 16, to the amount of tax paid in Andorra in accordance with these Articles; however, this tax credit can not exceed the amount of French tax attributable to such income.
  • (b)
    • (i) Please note that the term "amount of French tax pertaining to such income" in point (a) refers to the following:
      • (a) where the tax owed on such income is calculated by applying a proportional rate, the amount of net income in question multiplied by the rate which it's actually applied thereto;
      • (b) where the tax owed on such income is calculated by applying a progressive rate, the amount of net income in question multiplied by the rate resulting from the ratio between the tax actually owed for overall net income which is subject to tax in accordance with French laws and the amount of this overall net income.
    • (ii) It is understood that the term "amount of tax paid in Andorra" as used in (a) refers to the amount of the Andorran tax effectively and definitively borne for the income in question, under the provisions of the Convention, by the resident of France who is taxed on such income under French law.

(2) With respect to Andorra, double taxation shall be eliminated as follows:

  • (a) Where a resident of Andorra derives income which, in accordance with the provisions of this Convention is also taxable in France, Andorra shall grant on the tax it levies on that resident, a deduction of an amount equal to the income tax paid in France.
  • This deduction may not however exceed the portion of the Andorran tax, calculated before deduction corresponding to taxable income in France.
  • (b) Where, under the provisions of the Convention, a resident of Andorra receives income that is exempt from tax in Andorra, Andorra may nevertheless, in calculating the tax due on other income of such resident, take into account the exempted income.