French/US Double Tax Treaty Dated August 31, 1994

INCOME TAXES AND WEALTH TAX

France and the US signed on August 31, 1994 a new treaty, including two letters in appendix, in order to avoid double taxation and to prevent tax evasion concerning income taxes and wealth tax. This treaty is presently being ratified on the French side.

As soon as it comes into force, this treaty will replace the present double tax treaty dated July 28, 1967 and its four successive amendments. The provisions of the new treaty refer in many ways to the O.E.C.D. model tax convention. However, some of the provisions are original ones, especially those concerning the tax treatment of partnerships incomes, the regime of French source dividends paid to some American retirement organizations (pension funds) and to holders of some pension schemes, the creation of an arbitration procedure and the introduction of a provision for the limitation of the advantages of the treaty, which is rather complicated.