Legislation changes and clarifications impacting investment funds

Article

Legislation changes and clarifications impacting investment funds

A couple of clarifications impacting investment management were introduced by the Finance Bill for 2015. In addition, the much commented “Bill for Growth and Activity” (Loi Macron) also introduces a new investement fund dedicated to capital investment.

Executive Summary

Withholding Tax Exemption on dividends — Update for non-EU Funds

Until 17 August 2012, dividends distributed by French companies to foreign undertakings for collective investment (UCIs) were subject to a withholding tax levied at a rate of 30% (possibly reduced on the basis of applicable tax treaties). Further to the ECJ’s judgment sanctioning France for infringement of the freedom of movement of capital, the legislator has introduced an exemption for dividends paid to foreign UCIs comparable to French UCIs.

For collective investment funds based in states outside the EU, under the provisions of the 2012 Bill, the exemption was applicable only to the extent that the state had concluded a Convention on Mutual Administrative Assistance with France. However, in practice, the French Tax Authorities (FTA) considered that non-EU UCIs were not comparable, based on their statement of practice dated August 2013. The Amending Finance Bill for 2014 states that the Convention on Mutual Administrative Assistance must effectively enable the tax administration to obtain the information necessary to verify that the UCI complies with the conditions provided for the exemption and thus could benefit from it.

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Performance magazine issue 17, May 2015

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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