Scope Of The Former 40 Percent Tax Basis Relief On Dividends

Author:Mr Siamak Mostafavi, Nicolas André and Alexios Theologitis
Profession:Jones Day

Under the relevant French tax rules in force until 2012, individual shareholders domiciled for tax purposes in France could benefit from a 40 percent tax basis relief on the amount of dividends subject to the progressive tax scale of French personal income tax (up to 45 percent), unless they had elected to pay a 21 percent final withholding tax provided for under Article 117 quater of the French Tax Code (prélèvement forfaitaire libératoire). On April 10, 2015, the Conseil d'Etat requested from the Conseil constitutionnel a QPC on the conformity of these provisions to the French Constitution. The taxpayers that raised the issue of constitutionality argued that these provisions, which deprived French taxpayers of the 40 percent tax basis relief in the presence of a partial election to the final withholding tax regime, created a breach of equality...

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