France Tax-Exempt Income (2025)

1. Dividends and Capital Gains (under specific conditions):

• Participation Exemption (Régime des Sociétés Mères et Filiales):
  • If a foreign company holds a significant participation (generally at least 5%) in a French subsidiary, dividends received may be exempt from corporate income tax, subject to certain conditions.
  • This exemption aims to prevent double taxation.
  • A small portion of the dividends (a "quote-part" for expenses) remains taxable.
• Capital Gains from the Sale of Shares:
  • Under specific conditions, capital gains from the sale of shares in French subsidiaries may also be exempt from corporate income tax.
  • This exemption is also subject to holding periods and other requirements.
• Tax Treaties:
  • Double taxation treaties between France and other countries may provide exemptions or reductions for certain types of income, including dividends and capital gains.
  • It is crucial to consult the relevant tax treaty.

2. Interest and Royalties (under specific conditions):

• EU Directives:
  • Interest and royalties paid between associated companies within the European Union may be exempt from withholding tax under the EU Interest and Royalties Directive.
• Tax Treaties:
  • Double taxation treaties may also provide exemptions or reductions for withholding tax on interest and royalties.

3. Specific Investment Vehicles:

• Certain Regulated Investment Funds:
  • Income from investments in specific regulated investment funds in France may be exempt from taxation for non-residents.
• Specific Tax-Advantaged Savings Plans:
  • Certain savings plans, like the "Plan d'Épargne en Actions" (PEA), offer tax exemptions on capital gains and dividends, but these are generally designed for French residents.

4. Other Exemptions:

• Income from International Organizations:
  • Income earned by accredited international organizations and their employees in France is typically exempt from taxation.
• Diplomatic Income:
  • Income earned by accredited diplomats.

Important Considerations for Foreign Investors:

• Tax Treaties:
  • Always consult the relevant double taxation treaty between France and your country of residence.
• Documentation:
  • Maintain accurate and complete records to support any claims for tax exemptions.
• Professional Advice:
  • Seek professional tax advice from experts in France to ensure compliance and maximize your benefits.
• French Tax Administration (DGFiP) Guidelines:
  • It is very important to keep up to date with the guidelines published by the DGFiP.

Key Takeaway: