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HMRC internal manual

International Manual

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DT Agreements: France - Income from a UK source paid to a resident of France: UK dividends paid to a resident of France - portfolio investor

The DTA (see Article 9) provides for the payment of the excess of UK tax credit after retention of 15% of the aggregate of the UK dividend plus the tax credit. But see INTM343520 about UK dividends paid on or after 6 April 1999.

There is a ‘subject to tax’ condition for relief on UK company dividends. See INTM162090 for an explanation of ‘subject to tax’. See also INTM350550.

See INTM350570 for information about claims by French Pension Funds (caisse de retraite).

The anti-dividend stripping provisions (see Article 9(5)) apply where the French company owns 10% or more of the class of shares from which the dividend is paid. However, the article does not allow payment of tax credit to a company that controls 10% or more of the voting power in the UK company. This means that you will only have to make dividend stripping enquiries in exceptional cases where the following conditions are met

  • the shares were acquired after 21 October 1987 (the date of publication of the Protocol)
  • the claim is for dividends on non-voting shares where the claimant holds more than 10% of them
  • the claimant does not control 10% or more of the voting shares.

See INTM343550 for an explanation of dividend stripping.