• French Tax Law—Supreme Court Decision on Foreign Tax Credits: The French Supreme Court (Conseil d’Etat) Ruled That the France-China Tax Treaty Should Be Construed as Including a Tax Sparing Credit Provision, Under Which French Taxpayers Are Entitled to Foreign Tax Credits Even in The Absence of Any Withholding Tax in China
  • April 1, 2015 | Authors: Gauthier Blanluet; Marie-Aimée Delaisi; Nicolas de Boynes
  • Law Firm: Sullivan & Cromwell LLP - Paris Office
  • Under the provisions of the tax treaty between France and China, interest received by a French resident from Chinese sources gives right to a foreign tax credit in France corresponding to the withholding tax applicable in China. In order to foster French investments in China, the treaty used to provide that such withholding tax was deemed to be equal to 10% of the gross amount of the interest paid to French residents, irrespective of the actual withholding tax in China.