Notion of Dividends - Liability of the 'Precompte'

The "avoir fiscal" (tax credit) is exclusively attached to incomes distributed by a company to its associates as dividends, according to a decision made by the general meeting of its shareholders under the conditions provided by the Law dated July 24, 1966 modified for business companies (French High Court, December 29, 1995).

Accordingly, the benefits deemed to be distributed in view of the tax law by article 111 bis of the French General Tax Code due to the sole fact that the legal person is no longer subject to corporate income tax are not included in the field of application of the "avoir fiscal" (tax credit), neither are they therefore included in the field of application of the "precompte mobilier" (additional corporate income tax due on some distributions of dividends) provided by article 223 sexies-1 of the French General Tax Code.