Dividends received from 95% outside EU held subsidiaries: French corporate tax paid on the fixed proportion of costs and expenses should be claimed

As released in our Tax Alert dated 2 September 2015, the Court of Justice of the European Union concluded in the Groupe Steria SCA case (C-386/14) that the differentiated taxation of dividends received by parent companies of a tax-consolidated group depending on where the subsidiaries are established is contrary to EU law.

In light of the above, French tax authorities refund the corporate income tax paid by French tax-consolidated groups on the fixed proportion of costs and expenses applied on dividends received from their EU or EEA (Island, Norway, Lichtenstein) subsidiaries.

Regarding the dividends received from subsidiaries established outside the EU, litigations are expanding to obtain the restitution of the corporate income tax paid on the fixed proportion of costs and expenses.

Therefore, claims should be filed to ask for the reimbursement of the corporate tax related to that taxation for fiscal years 2013, 2014 and 2015:

By French companies, members of a tax-consolidated group, receiving dividends from subsidiaries held for more than 95% and established outside the EU;

By French companies receiving dividends from subsidiaries held for more than 95% established in the EU and/or outside the EU even if no tax-consolidated group has been set up in France.

In order to preserve their rights to restitution of French corporate income tax paid on the fixed proportion of costs and expenses for fiscal years 2013, 2014 and 2015 (corporate tax paid in 2014, 2015 and 2016), affected groups should consider filing claims quickly (and, in any case, before December 31, 2016 for the fiscal year ended December 31, 2013) to avoid being barred by the French statute of limitations.

Michel Guichard

Michel Guichard, Partner, leads the Indirect Tax activity. With more than 30 years’ experience in International and French Tax law, he advises his clients on indirect tax matters. Michel is […]