DOUBLE TAXATION AVOIDANCE
AGREEMENT BETWEEN FRANCE
AND
HONG KONG
PRESS CONFERENCE CONSULATE GENERAL OF FRANCE
8 DECEMBER 2011
What is a Double Taxation
Avoidance Agreement (DTA)?
 Double taxation arises when two
jurisdictions overlap:
 The same item of income or
profit is subject to tax in each.
 DTA organizes and provides:
 Relief from double taxation
 Certainty to investors on tax
rights of the Parties to DTA
 DTA helps the assessment of tax
liability
 DTA provides incentive:
 for company to do business
 for individuals to move about
History of Negotiation between
Hong Kong & France
 First round as early as 2003
 Second round 2004
 In 2005 HK endorses OECD’s
principles for exchange of
information
 IR(A)O 2010 and Disclosure Rules
commenced on 12 March 2010
 Signature of France/HK DTA on
21 October 2010 in Paris
 Entry into force: 1st December
2011
 Commencement date:
 France: 1st January 2012
 HK: 1st April 2012
Criteria for organizing taxation
between the Parties to DTA
 DTA is drafted on the base of
the OECD Model Tax
Convention
 Various technical criteria are
used in order to avoid or
reduce double taxation:
 Residence
 Establishment
 Nature of income, etc.
Residence
 Definition of the residence is
key in determining where the
individual taxpayer belongs
to.
 A Resident of a Party, which
activity is exercised in that Party,
is liable to tax in that Party for:
 Income from employment
 Any other income not
specifically dealt with in the
DTA
Permanent Establishment
 This is the key criterion for
enterprises
 In physical terms: a fixed
place
 In terms of duration: more
than 6 months
 Business profits are taxed in
the Party where an
enterprise has its permanent
establishment
Immovable Property
 Situation of the
property determines the
place of taxation
 Income from such
property is taxed by the
Party where immovable
property is situated
 Likewise for capital gains
from such property
Dual Taxation
Withholding tax
applies to
 DIVIDENDS
 INTEREST
 ROYALTIES
 The payee is liable to tax
in the Party where it is a
resident, but
 the Party of origin taxes
also the items at 10%
(instead of 25% and 33%
before)
Elimination of Double Taxation
 France:
 Exemption from tax on business profits
for enterprises located in HK (if profits
are exempted under French law);
 For other incomes: allowance of a tax
credit equal to the amount of the tax
paid in HK
 Hong Kong:
 For all incomes: allowance of a tax
credit equal to amount of the tax paid
in France
Exchange of Information
 No retrospectif effect
 No obligations as regards
automatic or spontaneous
exchange of information
 Requested information cannot be
disclosed to other authorities or a
third jurisdiction.
 Prohibition of « fishing
expedition »
 Obligation for a Party to provide
requested information, even in the
absence of a specific interest for
that Party
Thomas, Mayer & Associés
www.tmahk.com
MERCI !
2101, Tower One, Lippo Centre
89 Queensway, Hong Kong