Administrative comments on restitution and refund mechanisms for certain withholding taxes paid by non-resident companies

25 October 2022
Philippe Pescayre and Mathilde Colonna d’Istria

The French tax authorities released in June 2022 their comments on several mechanisms introduced by Budget Laws and related to the restitution of certain withholding taxes ("WHT") paid by non-resident companies. 

The Finance Law for 2020 and 2022 introduced the possibility for non-resident legal entities or organizations in a loss-making position to obtain a temporary restitution of WHT paid in France on dividends, royalties, fees, or capital gain (art. 235 quater of the CGI – French tax code), which can be assimilated to a tax deferral.

The deferral is ended in certain circumstances (for example when the company becomes profitable again) making the WHT concerned definitively due. The French tax authorities explain that when the tax deferral is ended because of a profit, the amount of income in respect of which the deferral is ended is limited to this profit.

The Finance Law for 2020 and 2022 also introduced the possibility for beneficiaries of certain incomes subject to the WHT to claim a refund. The amount of this refund is equal to the difference between the WHT paid and the WHT determined from a basis net of costs directly connected to this income (article 235 quinquies of the CGI - French tax code).

To benefit from this refund, the taxation rules in the State of residence as well as the provisions of the applicable international tax treaties must not have allowed the beneficiary to offset the WHT in that State. The French tax authorities specify that if the offsetting of WHT in the State of residence is allowed but limited, the restitution is possible but will also be limited to the part of the WHT that cannot be offset.

All the comments on these new mechanisms for restitution of certain WHT are available on the French tax administration’s website “Bulletin Officiel des Finances Publiques – Impôts” (

Philippe Pescayre, Partner, Mathilde Colonna d'Istria, Associate