Update of administrative guidelines on WHT suffered by Foreign CIVs


In August last year the French tax authorities (“FTA”) published draft guidelines specifying applicable criteria for non-UE foreign collective investment funds (“CIV”) to be regarded as comparable to French CIVs within the context of WHT exemption on dividends paid by French entities to foreign CIVs (E-alert dated September 2020).

On October 6th, the FTA released a final version of these guidelines, together with an English version of the so-called ‘RPPM form. Whereas very limited comments apply to EU CIVs, deeper developments impact the WHT exemption process for non-EU CIVs.

Reminder on the current legislation 

French tax law provides for an exemption of withholding tax (“WHT”) on dividends paid by French companies subject to corporate income tax (and for a reduced 15% WHT on dividends paid from their exempt income by certain real estate entities) when the beneficiary of those dividends is a CIV comparable to a French CIV.

The comparability test to be performed in order to benefit from this exemption differs depending on whether the CIV is established in the EU or in a non-EU State or territory which has concluded an agreement on mutual administrative assistance with France in order to combat fraud and tax evasion.

Whereas an EU CIV compliant with the UCITS IV or AIFM directives can be granted a WHT exemption at source by merely filing a dedicated form with its paying agent (‘RPPM form’ n°000037 or n°000086), a non-EU CIV had to first go through the process of a refund acceptance from the FTA, which carried out a detailed analysis of the fund’s compliance with the comparability criteria listed in their guidelines.

Key changes provided by the final administrative guidelines 

Scope of the WHT exemption on dividends paid within the EEA

The procedure of WHT exemption for EU CIVs, which was already open to UCITs located in a country of the European Economic Area, is now extended to AIFs located in an EEA country having transposed the AIFM directive.

Clarification on comparability criteria relating to the custodian 

The custodian or the service providers assuming the tasks of a custodian as referred to in European law must be one or several third-party entities with no relationship of interest with the team or the company responsible for managing the fund. The new guidelines specify in this respect that the notion of independence is not called into question in the case where the custodian and the fund manager are members of the same group of companies if it is demonstrated to the tax authorities, by any means (contracts, independent audit reports, internal regulations, etc.), that the custodian's independence from the team or the management company is effective. It should also be noted that, like the fund manager, the custodian or the service providers that assume this role must be subject to prudential supervision by an independent authority. 

New possibility of direct WHT exemption at source for non-EU CIVs 

The main change resulting from the new guidelines is that non-EU CIVs are now allowed to ask for a direct WHT exemption at source with the paying agent by filing a RPPM form (n°000089 or n°000092), together with relevant support documents, without having to go through a prior reimbursement procedure as was the case since August 2020. In parallel, a ruling procedure is implemented in order to allow non-EU CIVs to refer to the FTA in cases where they need to ensure that they comply with the conditions of comparability. Pursuant to Article L80 A of French Tax Procedure Code, the FTA should be required to take a position on the CIV’s comparability within 3 months of the submission of the ruling request. In case of a formal favourable decision obtained from the FTA (by way of a ruling or decision following the filing of a refund claim), non-EU CIVs can still seek for a WHT exemption at source by providing the paying agent with the FTA’s decision as well as a certificate on honour, the validity of which is now limited to 1 year instead of 2 previously (i.e.,1st page of the RPPM form). No support documentation is required to be provided in that case. 

Take away 

The new possibility of requesting direct exemption from WHT from the paying agent for non-EU funds which consider that their comparability does not raise difficulties remains conditional on the approval of such paying agent. Similarly, for other cases, although the introduction of a ruling procedure may lead to the expectation of faster processing times for files filed by non-European funds, clarification is awaited on the consequences of a lack of response within the three-month time limit set by the administration, which generally constitutes an implicit decision of rejection.

Suivez-nous !


Jordan Khamsitthideth

Jordan Khamsitthideth

Avocat, Directeur, PwC Société d'Avocats