DT7265 - Double Taxation Relief Manual: Guidance by country: France: Notes

Channel Tunnel Provision

Article 9 of the convention covers the taxation of profits and emoluments linked to the Channel Tunnel. Very broadly it ensures that the taxation of the Channel Tunnel Group Ltd and its French counterpart, France-Manche SA, their holding companies (Eurotunnel plc and Eurotunnel SA), and associated companies, so long as the current arrangements set out in the Channel Tunnel Treaty remain in being, is as follows:

  • the profits derived by each company are taxable only in their state of residence
  • the remuneration of their employees from employments on the Tunnel exercised in both contracting states may be taxed in the state in which the effective management of the employer is to be found notwithstanding the terms of Article 15 (the employment article which is in the usual form)

Teachers and researchers

Article 20 of the convention contains provisions in respect of visiting teachers and researchers.

If such individuals visit the UK or France for a period of less than two years, the host country will give a tax exemption but only where the teacher or researcher continues to be taxed by their “home” country, so the individual will always pay tax in one country or the other.

Offshore Activities

Article 22 deals with income arising from activities in connection with the exploration and exploitation of the seabed, sub-soil and their natural resources.

Under Article 22 (2) any such activities constitute a permanent establishment where they are carried on by an enterprise of either the UK or France in offshore areas where the other has jurisdiction notwithstanding the general definition of a permanent establishment in Article 5. This rule is however subject to a minimum exclusion for activities carried on for 30 days or less in aggregate in any 12 month period. The exclusion in turn is subject to an anti-avoidance rule to prevent the fragmentation of activities within a group of companies.

Profits derived from transporting supplies or personnel to offshore installations or from operating tugboats etc. remain taxable solely in the state of residence of the person concerned in line with the shipping article (Article 7 and see INTM153090).

The above extended definition of a permanent establishment does not apply for the purpose of the employment article, in particular Article 15(2)(c).