FRENCH WITHHOLDING TAX RECLAIM ON ROYALTIES
What is a withholding tax in France?
A withholding tax in France is a fiscal technique consisting for a French company to deduct French tax from an income to be paid to an overseas entity. In case of payment of royalties for example, the French licensee of IP rights will withhold an amount on the total price to be paid to its overseas licensor. The amount withheld before the payment of the license invoice is repaid to the French Tax Authorities.
The standard rate of the withholding tax on royalties in France is 33.33%. This rate may be either increased at 75% when the beneficiary of the income has its fiscal residence in a tax haven*, or decreased up to 0% depending on the bilateral agreements to avoid double taxation.
Countries classified as Tax Haven by France (2020) : Anguilla, Bahamas, British Virgin Islands, Panama, Seychelles, Vanuatu, Fiji, Guam, US Virgin Islands, Oman, American Samoa, Samoa, Trinidad and Tobago.
Types of royalties on which withholding tax is levied in France
Royalties are payments of any kind, received as a consideration for the use of, or the right to use any:
- Copyright of literary, artistic or scientific work, including cinematograph films and software
Example: License of IP rights to TV channels (i.e. public performance rights including broadcasting) or to Publishers (i.e. reproduction rights).
- Patent (including Plant Breeders’ Rights), trademark (including brand franchise), design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience;
Payments for the use of, or the right to use, industrial, commercial or scientific equipment are also regarded as royalties.
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The calculator tool here above is intended for illustration purposes only and should not be used as a substitute of a professional tax expert.