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Taxation of dividends

(The indications below apply to dividends paid in 2017 (tax return filed in 2018 and tax due in 2018)

 

Dividends paid to individuals resident in France

 

Dividends received by French resident taxpayers are taxed according to the relevant income tax bands. The tax payable is the same regardless of whether the shareholder chooses to be paid in cash or in shares (where the Bank offers this option).

 

  • 21% advance payment for income tax

When dividends are paid, an advance payment for income tax of 21% is deducted at source by the paying institution.

This deduction is mandatory: it can be offset against the amount of income tax payable.

Taxpayers whose taxable income is less than EUR 50,000 (in the case of single, divorced or widowed taxpayers) or EUR 75,000 (in the case of taxpayers taxed jointly as a household) may request an exemption from such deductions.

An exemption request must be submitted, under the taxpayer's responsibility, no later than 30 November in the year preceding that of the dividend payment. It takes the form of a sworn statement by the taxpayer, confirming to the paying institution that his/her taxable income on the tax demand received during the year preceding the dividend payment (issued in respect of the previous year's income) was less than EUR 50,000 or EUR 75,000, as applicable.

 

  • Social security deductions of 15.5%

In addition, when a dividend payment is received, a 15.5% deduction for social security contributions shall apply (CSG - General Social Security Contribution: 8.2%, CRDS - Contribution to Reimbursement of Social Debt: 0.5%, social security contribution of 4.5%, additional contribution of 0.3%, solidarity contribution of 2%).

 

  • Income tax

When filing tax returns on form no. 2042, taxpayers must ensure that the amount of dividends received is entered correctly on the pre-filled tax return.
It is subsequently taxed as follows:

  • annual allowance of 40% on the amount of income distributed,
  • deduction of custody fees,
  • [deduction of a fraction of the CSG (5.1%) on total income - calculated by the tax office],
  • income tax calculated according to the relevant tax bands,
  • offsetting of the 21% advance payment.

 

Dividends paid to individuals not resident in France

 

Dividends paid to individuals not resident in France are subject to a withholding tax at the 30% upper rate.

This rate falls to 21% for residents of an EU member state, Iceland, Norway or Liechtenstein, or to other reduced rates or even to zero where international tax treaties apply (1).

 

(1) However, regardless of the beneficiary's place of residence, a 75% withholding tax is levied if dividends are paid in a non-cooperative state or territory.