ARTICLE 10
Dividends
1. Dividends paid by a company that is a resident of a Contracting State to a resident of the
other Contracting State may be taxed in that other State.
2. Such dividends may also be taxed in the Contracting State of which the company paying
the dividends is a resident, and according to the laws of that State, but if the beneficial owner of
the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 percent of the gross amount of the dividends if the beneficial owner is a
company that owns:
(i) directly, at least 10 percent of the voting power in the company paying
the dividends, if such company is a resident of the United States; or
(ii) directly or indirectly, at least 10 percent of the capital of the company
paying the dividends, if such company is a resident of France;
(b) 15 percent of the gross amount of the dividends in other cases. The provisions
of subparagraph (a) shall not apply in the case of dividends paid by a United States
regulated investment company or real estate investment trust or by a French "société
d'investissement a capital variable." In the case of dividends paid by a United States
regulated investment company or a French "société d'investissement capital variable," the
provisions of subparagraph (b) shall apply. In the case of dividends paid by a United
States real estate investment trust, the provisions of subparagraph (b) shall apply only if
the dividend is beneficially owned by an individual owning a less than 10 percent interest
in such real estate investment trust; otherwise, the rate of withholding tax applicable
under the domestic law of the United States shall apply.
3. The provisions of paragraph 2 shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid.
4. (a) A resident of the United States who derives and is the beneficial owner of
dividends paid by a company that is a resident of France that, if received by a resident of
France would entitle such a resident to a tax credit ("avoir fiscal") shall be entitled to a
payment from the French Treasury equal to such tax credit ("avoir fiscal"), subject to
deduction of the tax provided for in subparagraph (b) of paragraph 2.
(b) The provisions of subparagraph (a) shall apply only to a resident of the United
States that is:
(i) an individual or other person (other than a company) ; or
(ii) a company that is not a regulated investment company and that does
not own, directly or indirectly, 10 percent or more of the capital of the company
paying the dividends; or
(iii) a regulated investment company that does not own, directly or
indirectly, 10 percent or more of the capital of the company paying the dividends,
but only if less than 20 percent of its shares is beneficially owned by persons who
are neither citizens nor residents of the United States.
(c) The provisions of subparagraph (a) shall apply only if the beneficial owner of
the dividends is subject to United States income tax in respect of such dividends and of
the payment from the French Treasury.
(d) Notwithstanding the provisions of subparagraphs (b) and (c), the provisions of
subparagraph (a) shall also apply to a partnership or trust described in subparagraph (b)
(iv) of paragraph 2 of Article 4 (Resident), but only to the extent that the partners,
beneficiaries, or grantors would qualify under subparagraph (b) (i) or (b) (ii) and under
subparagraph (c) of this paragraph.
(e) (i) A resident of the United States described in subparagraph (ii) that does
not own, directly or indirectly, 10 percent or more of the capital of a company that
is a resident of France, and that derives and beneficially owns dividends paid by
such company that, if derived by a resident of France, would entitle such resident
to a tax credit ("avoir fiscal”), shall be entitled to a payment from the French
Treasury equal to 30/85 of the amount of such tax credit (“avoir fiscal”), subject
to the deduction of the tax provided for in subparagraph (b) of paragraph 2;
(ii) The provisions of subparagraph (i) shall apply to:
(aa) a person described in subparagraph (b) (i) of paragraph 2 of
Article 4 (Resident), with respect to dividends derived by such person
from the investment of retirement assets;
(bb) a pension trust and any other organization described in
subparagraph (b) (ii) of paragraph 2 of Article 4 (Resident); and
(cc) an individual, with respect to dividends beneficially owned by
such individual and derived from investment in a retirement arrangement
under which the contributions or the accumulated earnings receive tax-
favored treatment under U.S. law.
(f) The gross amount of a payment made by the French Treasury pursuant to
subparagraph (a), (d), or (e) shall be deemed to be a dividend for the purposes of this
Convention.
(g) The provisions of subparagraphs (a), (d), and (e) shall apply only if the
beneficial owner of the dividends shows, where required by the French tax
administration, that he is the beneficial owner of the shareholding in respect of which the
dividend are paid and that such shareholding does not have as its principal purpose or one
of its principal purposes to allow another person to take advantage of the provisions of
this paragraph, regardless of whether that person is a resident of a Contracting State.
(h) Where a resident of the United States that derives and beneficially owns
dividends paid by a company that is a resident of France is not entitled to the payment
from the French Treasury referred to in subparagraph (a), such resident may obtain a
refund of the prepayment (précompte) to the extent that it was actually paid by the
company in respect of such dividends. Where such a resident is entitled to the payment
from the French Treasury referred to in subparagraph (e), such refund shall be reduced by
the amount of the payment from the French Treasury. The gross amount of the
prepayment (précompte) refunded shall be deemed to be a dividend for the purposes of
the Convention. It shall be taxable in France according to the provisions of paragraph 2.
(i) The competent authorities may prescribe rules to implement the provisions of
this paragraph and further define and determine the terms and conditions under which the
payments provided for in subparagraphs (a), (d), and (e) shall be made.
5. (a) The term "dividends" means income from shares, "jouissance” shares or
"jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims,
participating in profits, as well as income treated as a distribution by the taxation laws of
the State of which the company making the distribution is a resident; and income from
arrangements, including debt obligations, that carry the right to participate in, or are
determined with reference to, profits of the issuer or one of its associated enterprises, as
defined in subparagraph (a) or (b) of paragraph 1 of Article 9 (Associated Enterprises), to
the extent that such income is characterized as a dividend under the law of the
Contracting State in which the income arises. The term "dividend" shall not include
income referred to in Article 16 (Directors’ Fees).
(b) The provisions of this Article shall apply where a beneficial owner of
dividends holds depository receipts evidencing ownership of the shares in respect of
which the dividends are paid, in lieu of the shares themselves.
6. The provisions of paragraphs 1 through 4 shall not apply if the beneficial owner of the
dividends, being a resident of a Contracting State, carries on business in the other Contracting
State of which the company paying the dividends is a resident through a permanent establishment
situated therein, or performs in that other State independent personal services from a fixed base
situated therein, and the dividends are attributable to such permanent establishment or fixed base.
In such a case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal
Services), as the case may be, shall apply.
7. (a) A company that is a resident of a Contracting State and that has a permanent
establishment in the other Contracting State or that is subject to tax on a net basis in that
other State on items of income that may be taxed in that other State under Article 6
(Income from Real Property) or under paragraph 1 of Article 13 (Capital Gains) may be
subject in that other State to a tax in addition to the other taxes allowable under this
Convention. Such tax, however, may not exceed 5 percent of that portion of the business
profits of the company attributable to the permanent establishment, or of that portion of
the income referred to in the preceding sentence that is subject to tax under Article 6 or
paragraph 1 of Article 13, that:
(i) in the case of the United States, represents the "dividend equivalent
amount" of those profits or income, in accordance with the provisions of the
Internal Revenue Code, as it may be amended from time to time without changing
the general principle thereof;
(ii) in the case of France, is included in the base of the French withholding
tax in accordance with the provisions of Article 115 "quinquies" of the French tax
code (code general des impôts) or with any similar provisions which amend or
replace the provisions of that Article.
(b) The taxes referred to in subparagraph (a) also shall apply to the portion of
business profits, or of the income subject to tax under Article 6 (Real Property) or
paragraph 1 of Article 13 (Capital Gains) that is referred to in subparagraph (a), which is
attributable to a trade or business conducted in one Contracting State through a
partnership or other entity treated as a pass-through entity or transparent entity under the
laws of that State by a company that is a member of such partnership or entity and a
resident of the other Contracting State.
8. Subject to the provisions of paragraph 7, where a company that is a resident of a
Contracting State derives profits or income from the other Contracting State, that other State may
not impose any tax on the dividends paid by the company, except insofar as such dividends are
paid to a resident of that other State or insofar as the dividends are attributable to a permanent
establishment or fixed base situated in that other State, nor subject to the company’s undistributed
profits to a tax on the company’s undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in such other State.