2 bis: Withholding of income tax at source

1. The withholding tax provided for in 2 of article 119 bis is not applicable to dividends distributed to a legal entity that meets the conditions listed in 2 of this article by a company or organisation subject to corporation tax at the standard rate.

2. In order to benefit from the exemption provided for in 1, the legal entity must prove to the debtor or the person who ensures the payment of this income that it is the beneficial owner of the dividends and that it meets the following conditions:

a) Have its effective place of management in a Member State of the European Union or in another State party to the Agreement on the European Economic Area which has entered into an administrative assistance agreement with France to combat tax fraud and tax evasion and not be considered, under the terms of a double taxation agreement entered into with a third State, as having its tax residence outside the European Union or the European Economic Area;

b) Take one of the forms listed in Part A of Annex I to Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States or an equivalent form where the company has its effective centre of management in a State party to the Agreement on the European Economic Area;

c) Hold directly, uninterruptedly for two years or more and in full ownership or bare ownership, at least 10% of the capital of the legal entity distributing the dividends, or undertake to hold this holding uninterruptedly for a period of at least two years and designate, as in the case of turnover tax, a representative who is responsible for payment of the withholding tax referred to in 1 in the event of failure to comply with this undertaking ;

The shareholding rate referred to in the first paragraph of this c is reduced to 5% where the legal entity which is the beneficial owner of the dividends holds shareholdings which satisfy the conditions laid down in Article 145 and is deprived of any possibility of deducting the withholding tax provided for in 2 of Article 119 bis ;

d) Be liable, in the Member State of the European Union or in the State party to the Agreement on the European Economic Area where it has its place of effective management, to the corporation tax of that State, without the possibility of an option and without being exempt therefrom;

e) (repealed).

2 bis. The provisions of 1 apply to dividends distributed to permanent establishments of legal entities meeting the conditions set out in 2, where these permanent establishments are located in France, in another Member State of the European Union or in another State party to the Agreement on the European Economic Area which has concluded an administrative assistance agreement with France with a view to combating tax evasion and avoidance.

3. 1 does not apply to dividends distributed as part of a scheme or series of schemes which, having been put in place to obtain, as the principal objective or as one of the principal objectives, a tax advantage that runs counter to the object or purpose of the same 1, is not genuine having regard to all the relevant facts and circumstances.

A scheme may comprise several stages or parts.

For the purposes of this 3, a scheme or series of schemes shall be deemed not to be genuine to the extent that such scheme or series of schemes is not put in place for valid commercial reasons which reflect economic reality.

4. A decree shall specify, as necessary, the terms of application of these provisions.