ARTICLE I
1. Subparagraph (b) (iii) of paragraph 2 of Article 4 (Resident) of the Convention shall be
deleted and replaced by the following:
“(iii) in the case of the United States, a regulated investment company, a real
estate investment trust, and a real estate mortgage investment conduit; in the case
of France, a “société d’investissement à capital variable”; and any similar
investment entities agreed upon by the competent authorities of both Contracting
States;”.
2. Subparagraph (b) (iv) of paragraph 2 of Article 4 (Resident) of the Convention shall be
deleted and replaced, and new subparagraphs (b) (v) and (vi) of paragraph 2 of Article 4 are
added as follows:
“iv) a partnership or similar pass-through entity, an estate, and a trust (other
than one referred to in subparagraph (ii) or (iii) above), whether or not organized
or managed in one of the Contracting States, but only to the extent that the income
derived by such partnership, similar entity, estate, or trust is treated for taxation
purposes in that Contracting State as the income of a resident, either in the hands
of such partnership, entity, estate or trust, or in the hands of its partners,
beneficiaries or grantors, it being understood that a “société de personnes”, a
“fonds commun de placement”, a “groupement d’intérêt économique” (economic
interest group), or a “groupement européen d’intérêt économique” (European
economic interest group) that is constituted in France and has its place of effective
management in France and that is not subject to company tax therein shall be
treated as a partnership for purposes of United States tax benefits under this
Convention, provided that a partnership or similar pass-through entity, an estate
and a trust which is not organized or managed in one of the Contracting States
shall be entitled to the benefits of this convention with respect to the income or
gains derived by such entity arising in France if the following additional
conditions are satisfied:
(aa) the absence of contrary provisions in a double taxation convention
between a Contracting State and the third State;
(bb) the fact that the partnership or similar pass-through entity, estate or trust
is not treated as a body corporate for tax purposes or otherwise liable to
tax on French source income either in its own hands or in the hands of its
partners, beneficiaries or grantors under the tax law of the third State;
(cc) a partner's, beneficiary’s, or grantor’s share of the income or gain of the
partnership or similar pass-through entity, estate or trust is taxed in the
same manner, including the nature or source of that income or gain and
the time when that income or gain is taxed, as would have been the case
if the income or gain had been derived directly, except to the extent
resulting from any difference in accounting methods, accounting periods,
or other similar difference; and
(dd) it is possible to exchange information concerning the partnership or
similar pass-through entity, estate or trust or partners, beneficiaries or
grantors under the terms of a double taxation convention between the
Contracting State in which the income or gain arises and the third State;
v) a partnership or similar pass-through entity, an estate, and a trust (other than
one referred to in subparagraph (ii) or (iii) above), which is organized in the
United States, shall be treated as a resident of the United States to the extent
provided in subparagraph (iv) above, and as a resident of France to the extent that
the income derived by such partnership, similar pass-through entity, estate or trust
arises in France and corresponds to the share of the profits or losses of such entity
which benefits a resident of France;
vi) it is understood that, for the purposes of the subparagraphs (iv) and (v)
above, the income derived by a partnership or similar pass-through entity, an
estate and a trust (other than one referred to in subparagraph (ii) or (iii) above), is
considered to be treated for taxation purposes in a Contracting State as the income
of a resident to the extent of this income which benefits a partner, beneficiary, or
grantor that is a pension trust, an other organization or a not-for-profit
organization referred to in subparagraph (ii) above, notwithstanding that all or part
of this income of such trust, other organization, or not-for-profit organization is
exempt from income taxation in that State.”