Tax litigation · Withholding tax · Funds and UCITS

French dividend withholding tax: reclaims for funds and non-residents

Has French withholding tax been levied on dividends paid to a fund, a company or a shareholder established outside France? Domestic law, tax treaties and EU law often provide an exemption or a refund. Two developments in 2026 change practice: a pay-then-reclaim procedure for nine tax treaties, and a longer time limit to claim back withholding tax.

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Analysis by François Ouairy, partner, Paris Bar · firm ranked Best Lawyers 2026 · Updated 6 October 2026

What is the French withholding tax rate on dividends paid to non-residents, and how can it be reclaimed?

Under domestic law, the withholding tax provided for in article 119 bis, 2 of the French Tax Code is 12.8% for individuals and equal to the standard corporate income tax rate, i.e. 25%, for companies and other entities; it is 15% for certain non-profit bodies of the EU or EEA and 75% for income paid in a non-cooperative State or territory, unless proven otherwise (article 187). The applicable tax treaty often reduces the rate; the EU parent-subsidiary regime (article 119 ter), the exemption for foreign funds comparable to French investment funds (article 119 bis, 2) and the rules for loss-making companies can eliminate it.

Where withholding tax was wrongly levied, a refund is claimed by filing a claim no later than 31 December of the second year following the year in which the tax was paid over to the Treasury (Tax Procedure Code, article R* 196-1, as applicable since 30 July 2026), with evidence of residence, beneficial ownership and the amount withheld.

French Tax Code, articles 119 bis, 119 ter, 187, 219 and 219 bis; Tax Procedure Code, article R* 196-1; decree no. 2026-692 of 27 July 2026.

— In brief
Domestic rates
12.8% (individuals), 25% (companies), 75% (non-cooperative State or territory)
Foreign funds
Exemption for funds comparable to French investment funds (article 119 bis, 2), subject to conditions
Loss-making companies
Refund with tax deferral (article 235 quater), following the Sofina judgment
New in 2026
Pay-then-reclaim for nine treaties without withholding; claim period extended to two years
Refund
Claim before 31 December of the second year following payment of the tax to the Treasury
01

Withholding tax rates and exemptions

Dividends and other distributions made by a French company are subject to withholding tax where their beneficial owners do not have their tax domicile or registered office in France (French Tax Code, article 119 bis, 2). The French paying institution (the paying agent) levies it on the gross amount when the dividend is paid. The domestic rate is set by article 187: 12.8% for individuals, the standard corporate income tax rate (25%) for companies and other entities, 15% for EU or EEA bodies that would be taxed as non-profit organisations if established in France, and 75% for income paid outside France in a non-cooperative State or territory (other than those referred to in article 238-0 A, 2 bis, 2°), unless the payer proves that this location has neither the purpose nor the effect of tax fraud.

That rate is often only a starting point. The following must be reviewed in turn:

  • The tax treaty with the beneficiary's State of residence, which caps or eliminates the withholding: see our tax treaty atlas;
  • The EU parent-subsidiary regime (article 119 ter): exemption for a company that is the beneficial owner, has its place of effective management in the EU or EEA without being treaty-resident in a third State, has an eligible legal form and is liable to corporate income tax without option or exemption, and directly holds, uninterruptedly and in full or bare ownership, at least 10% of the capital for two years, or undertakes to hold it for two years and appoints a representative liable for the withholding (5% where the holding meets the conditions of article 145 and the withholding cannot be credited), the distributing company being subject to corporate income tax at the standard rate, subject to the anti-abuse clause;
  • Foreign funds comparable to French investment funds, exempt under article 119 bis, 2 (next section);
  • Loss-making companies (article 235 quater), those in a situation comparable to judicial liquidation (article 119 quinquies) and the partial refund for expenses (article 235 quinquies), each subject to strict conditions.
02

Withholding tax reclaims for investment funds and foreign UCITS

In Santander (CJEU, 10 May 2012, joined cases C-338/11 to C-347/11), the Court of Justice held that withholding tax on dividends paid to non-resident UCITS, while resident UCITS were exempt, infringes the free movement of capital, and that the situation of the unit-holders is not relevant to that assessment. France responded by inserting an exemption into article 119 bis, 2, applicable since 17 August 2012 (law no. 2012-958 of 16 August 2012). Regarding a regime that reserved an exemption to resident UCITS, the Court confirmed that such a difference in treatment is a restriction, whose justification is assessed in light of the comparability of the situations and the grounds relied on by the State (CJEU, 21 June 2018, Fidelity Funds, C-480/16). This case law does not dispense with the comparability test laid down in French law.

The exemption applies to collective investment undertakings set up under foreign law, located in an EU Member State or in a State that has concluded an administrative assistance agreement with France, which meet two cumulative conditions:

  • Raising capital from a number of investors with a view to investing it, in accordance with a defined investment policy, for the benefit of those investors;
  • Having characteristics similar to the categories of French funds specified in the provision (UCITS, general-purpose investment funds, private equity funds, real estate funds (OPCI), SICAFs, professional funds, employee savings funds);
  • For a fund established outside the EU, the assistance agreement must actually allow the French tax authorities to verify those conditions. The Conseil d'État held that this requirement is compatible with EU law (CE, 9 December 2015, no. 388850, referring to CJEU, 10 April 2014, C-190/12);
  • Exclusions and special case: income paid outside France in a non-cooperative State or territory; distributions made out of the exempt profits of SIICs, SPPICAVs and certain of their subsidiaries, which bear a 15% withholding tax that is neither final, refundable nor creditable, even where the recipient is an otherwise eligible fund (article 119 bis, 2 and article 219 bis).

The administrative guidelines (BOI-RPPM-RCM-30-30-20-70) set the comparability criteria: authorisation or registration with a supervisory authority, an information document for investors, an authorised management company, an independent depositary under prudential supervision, an investment and risk-spreading policy, and audited accounts. An authorised EU UCITS is deemed comparable; a fund from a third country must demonstrate comparability using form BOI-FORM-000092 (French version BOI-FORM-000089) and the documents it lists, where appropriate through a tax ruling (Tax Procedure Code, article L. 80 B, 1°).

In practice, relief at source is obtained if the form reaches the paying agent before payment, through the chain of custodians. Otherwise, tax is withheld and the fund claims a refund from the paying agent or from the Non-Residents Tax Directorate (DINR). The administrative guidelines state that the withholding may be challenged both by the paying agent liable for it and by the non-resident shareholder (BOI-RPPM-RCM-30-30-20-70, § 200).

03

Loss-making companies: the Sofina judgment and its aftermath

In Sofina (CJEU, 22 November 2018, C-575/17), a reference from the French Conseil d'État, the Court held that withholding tax levied immediately on dividends received by a loss-making non-resident company, whereas a loss-making resident company is taxed only when it returns to profit, is a restriction on the free movement of capital. The Conseil d'État drew the consequences (CE, 27 February 2019, no. 398662) and specified that the loss-making position is assessed under the law of the State of residence.

French law now provides several mechanisms, each strictly conditional. Article 235 quater allows a legal entity that is loss-making under the rules of its own State to obtain a refund of the withholding tax against a deferred tax charge: its seat, or the permanent establishment whose profits include the income, must be in an EU or EEA State bound to France by an administrative assistance agreement and a recovery assistance agreement and not non-cooperative, or, for dividends, in a third State bound by the same agreements and not non-cooperative, where the holding does not allow it to participate effectively in the management or control of the distributing company. The deferral requires an annual filing showing the loss and ends, in particular, on a return to profit, on a dissolution without transfer of the losses or on a filing failure. Article 119 quinquies disapplies withholding for a loss-making company, meeting the same location conditions, that is subject to proceedings comparable to judicial liquidation or, failing that, is insolvent with recovery manifestly impossible. Finally, article 235 quinquies allows a legal entity whose profits are not taxed in the hands of its members to obtain a refund limited to the tax computed on a base net of directly related acquisition and holding costs, if those costs would be deductible in France and the withholding cannot be credited in the State of residence.

04

What changes in 2026

No change to the dividend withholding tax rate has been enacted: the Finance Act for 2026 (law no. 2026-103 of 19 February 2026) amended neither article 187 nor article 119 bis, 2, whose versions in force date from the Finance Act for 2025. The 2026 changes concern procedure, and they matter:

  • Pay-then-reclaim for nine tax treaties. Since 1 January 2026, dividends paid to a resident of a State whose tax treaty provides for no withholding or a full exemption bear withholding tax at the article 187 rate when paid; the beneficiary then obtains a refund by proving that all treaty conditions are met (article 119 bis A, II, introduced by article 96 of law no. 2025-127 of 14 February 2025). The guidelines of 16 March 2026 (BOI-INT-DG-20-20-20-30) list Saudi Arabia, Bahrain, Egypt, the United Arab Emirates, Finland, Kuwait, Lebanon, Oman and Qatar, and exclude beneficiaries already exempt by reason of their status or shareholding threshold;
  • A demanding beneficial ownership file. The claim, filed with the Non-Residents Tax Directorate, includes the residence certificate on form 5000 certified by the foreign tax authority, form 5001, evidence of payments and withholdings for each intermediary, a sworn statement that there is no obligation to pass on the shares or the income and, for a company, a description of its activity, resources, governance and the context in which the shares were acquired. The tax authorities may request securities lending, repo or derivative contracts relating to those shares;
  • A longer time limit for claims. The Conseil d'État held that the special time limit for withholding taxes, which expired on 31 December of the year following the withholding, breaches the principle of equality (CE, 16 February 2026, no. 500909). Decree no. 2026-692 of 27 July 2026 removed it with effect from 30 July 2026: claims now follow the ordinary time limit, until 31 December of the second year following the year in which the contested tax was paid;
  • Beneficial ownership at the heart of audits. Since the Finance Act for 2025, article 119 bis, 2 expressly refers to beneficial owners, and article 119 bis A captures value transfers linked to temporary transfers of shares and instruments with equivalent effect. The Conseil d'État held that the exemption of article 119 ter requires the company to be the beneficial owner of the dividends, which, in the circumstances of that case, a holding company that immediately and entirely passed on the sums received, with no other activity or funds of its own, did not satisfy (CE, 8 November 2024, no. 471147).

For investors from the nine States concerned, treaty relief is therefore no longer granted at source: it becomes a refund claim, which requires a complete file and follow-up until payment.

05

Obtaining a refund of the withholding tax

Wrongly levied withholding tax is recovered through a contentious tax claim (réclamation) (Tax Procedure Code, article L. 190), filed with the Non-Residents Tax Directorate or, for a foreign fund, first with the paying agent, which refunds by offset or repayment. Depending on the ground relied on, the claim is based on the treaty (forms 5000 and 5001), on the fund exemption (forms BOI-FORM-000037, 000086, 000089 or 000092), on the parent-subsidiary regime or on EU law.

The file must establish residence, beneficial ownership, the gross amount, the tax withheld and the chain of intermediaries. Moratory interest on the refund, at the rate of the interest for late payment, i.e. 0.20% per month from the date of payment, may be due under the conditions of article L. 208 of the Tax Procedure Code, in particular where a tax relief decision (dégrèvement) is granted following a claim (French Tax Code, article 1727). Whether it applies to a refund made by the paying agent or to the refund procedure introduced in 2026 is assessed case by case.

Timing is the first point of vigilance: until 31 December of the second year following the year in which the paying agent paid the tax over to the Treasury, which is usually the year of the dividend payment or early the following year. For withholdings made before 30 July 2026, the admissibility of a claim filed outside the former special time limit is assessed case by case, in light of the decision of 16 February 2026: where in doubt, the firm recommends filing a claim without delay and relying in the alternative on the principle of equality thus recognised. The Conseil d'État had already applied the ordinary two-year time limit to a non-resident company relying on the principle of equivalence and treated less favourably by the special time limit (CE, 2 February 2022, no. 441511).

06

Worked example: an EU fund and a Gulf company

Fund. In March 2025, a UCITS authorised in another EU Member State receives €2,000,000 of dividends from listed French companies. The fund meets the conditions of article 119 bis, 2, but the exemption form did not reach the paying agent in time, which applies the 25% domestic rate instead of the exemption. Gulf company. In May 2026, a company resident in the United Arab Emirates, holding a minority stake, receives €1,000,000 of dividends; the paying agent now applies the 25% rate.

Illustrative assumptionsEU UCITS (2025)UAE company (2026)
Gross dividend€2,000,000€1,000,000
Tax withheld€500,000 (25%)€250,000 (25%)
Tax due if all conditions are proven€0 (article 119 bis, 2)€0 (treaty)
Refund to claim€500,000€250,000
Claim deadline31 December 202731 December 2028
Moratory interest if article L. 208 applies (relief granted 24 months after payment)€24,000Not computed: entitlement to interest to be confirmed for this refund

Interest is computed at 0.20% per month over 24 months (4.8%), provided the refund takes the form of a relief decision within the scope of article L. 208 of the Tax Procedure Code. The deadlines assume the tax was paid over to the Treasury in the year of the dividend payment. For the fund, the assumption is the 25% domestic rate applicable to entities where no evidence reached the paying agent in time; a treaty rate might apply depending on the fund's situation. In the second case, the absence of treaty withholding requires the company to be resident in the UAE for treaty purposes and the beneficial owner, the holding not to be connected with a permanent establishment in France and the company not to fall within the specific cases provided for by the treaty; the refund requires the beneficial ownership file described above; the text does not specify whether this refund, which does not correct an error, carries moratory interest.

07

How we assist you

The firm maps recoverable withholdings and their deadlines, builds the comparability case for a fund or the loss-making position of a company, prepares the beneficial ownership file required since 2026, and manages claims and litigation up to the tax court. It acts for funds, management companies, insurers and foreign parent companies, together with their custodians and local advisers, and secures future distributions in advance.

See also: withholding tax on royalties and services (article 182 B); the parent-subsidiary regime add-back; permanent establishment and corporate income tax; tax treaty atlas.

08

Lead counsel: François Ouairy

François Ouairy, partner admitted to the Paris Bar, leads the firm's withholding tax work: upfront analysis, claims, audits and defence before the tax authorities and the courts. The firm is ranked Best Lawyers 2026.

  • Withholding tax (article 119 bis)
  • Fund reclaims
  • Sofina and loss-making companies
  • Claims and litigation
  • Firm ranked Best Lawyers 2026
Frequently asked questions

French dividend withholding tax: your questions

What is the French withholding tax rate on dividends paid to a non-resident?

Under domestic law, 12.8% for an individual, 25% for a company or other entity, 15% for certain non-profit bodies of the EU or EEA and 75% for income paid in a non-cooperative State or territory, unless proven otherwise (article 187 of the French Tax Code). The tax treaty often reduces the rate, and several regimes can eliminate it: the parent-subsidiary regime, the exemption for comparable funds, and the rules for loss-making companies.

Can a foreign investment fund be exempt or reclaim French withholding tax?

Yes, if it raises capital from a number of investors under a defined investment policy and has characteristics similar to a French investment fund, in an EU Member State or a State with an effective administrative assistance agreement with France (article 119 bis, 2). Relief applies at source on presentation of the official form; otherwise the fund claims a refund no later than 31 December of the second year following the year in which the tax was paid over to the Treasury.

What documents must a non-EU fund provide?

Form BOI-FORM-000092 (or 000089 in French) and evidence of comparability: authorisation or registration, investor information document, authorised management company, independent depositary, risk-spreading policy and audited accounts. A favourable decision by the tax authorities, through a ruling or a refund decision, then allows relief at source on the basis of an annual certificate.

What did the Sofina judgment decide, and what does the law now provide?

The Court of Justice held that immediate withholding tax on a loss-making non-resident company infringes the free movement of capital, whereas a loss-making resident company is taxed only when it returns to profit (CJEU, 22 November 2018, C-575/17). Article 235 quater now provides, subject to location conditions and annual filings, for a refund with tax deferral, and article 119 quinquies disapplies withholding for loss-making companies in a situation comparable to judicial liquidation.

What changes in 2026 for French dividend withholding tax?

No rate has changed. Since 1 January 2026, residents of nine States whose treaty provides for no withholding (including Finland, the United Arab Emirates and Qatar) bear domestic withholding tax and then claim a refund (article 119 bis A, II). Since 30 July 2026, the time limit to claim back withholding tax runs until 31 December of the second year following the year in which it was paid over to the Treasury.

Did the Finance Act for 2026 change dividend withholding tax?

No. Law no. 2026-103 of 19 February 2026 amended neither the rate in article 187 nor article 119 bis, 2 of the French Tax Code. The refund procedure applicable since 1 January 2026 results from the Finance Act for 2025, and the longer claim period from a decree of 27 July 2026.

What is the deadline to claim a refund?

31 December of the second year following the year in which the tax was paid over to the Treasury (Tax Procedure Code, article R* 196-1). Tax withheld and paid over in 2025 can therefore be claimed until 31 December 2027. For withholdings made before 30 July 2026, admissibility under the former special time limit must be checked case by case.

Does a refund carry interest?

Moratory interest at 0.20% per month, from the date of payment, is due under the conditions of article L. 208 of the Tax Procedure Code, in particular where a relief decision (dégrèvement) is granted following a claim or by the court (French Tax Code, article 1727). For a refund made by the paying agent or under the refund procedure introduced in 2026, entitlement to interest is assessed case by case.

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This page presents French withholding tax on non-residents' dividends for information purposes; each case calls for a specific analysis, tax treaties and EU law included. References to the French Tax Code, the Tax Procedure Code, administrative guidelines and case law in force on 6 October 2026.