France: Court questions validity of 3% tax on dividends | KPMG | GLOBAL

France: Court questions validity of 3% tax on dividends

France: Court questions validity of 3% tax on dividends

France’s high tax court (Conseil d’Etat) issued four decisions that referred questions for judgment to the French Constitutional Court (Conseil Constitutionnel) and to the Court of Justice of the European Union (CJEU) with regards to the compatibility under EU law of the 3% surtax imposed on certain dividends by French law.


Related content


Under French tax law, a 3% surtax is imposed on dividends paid by French companies to their foreign parent company. There are only a few exemptions to the surtax. Because of this 3% surtax, it has been reported that French companies have been postponing making dividend distributions.

Issues referred

The Conseil d’Etat issued four decisions on 27 June 2016 that raised and referred the following issues concerning the 3% surtax and its compatibility with EU or French law:

  • Is the 3% surtax compatible with articles 4 and 5 of the EU Parent-Subsidiary Directive (a question referred to the CJEU)?
  • Is the 3% surtax compatible with the French constitutional principle of taxpayer equality, when a foreign parent company holds more than 95% of the French company (a question referred to the Constitutional Court)?

KPMG observation

Tax professionals with Fidal* have observed that one issue—whether the 3% surtax is compatible with the principal of freedom of establishment under EU law—was not referred to the CJEU, but that such compatibility could be highly questionable when the EU parent company holds (directly or indirectly) more than 95% of the subsidiary. 

There are other similar procedures currently under consideration by the European Commission and the CJEU—specifically the Belgian “fairness tax” that is described as being fairly similar to France’s 3% surtax on dividends and about which the compatibility issue is being addressed.  

Finally, taxpayers need to note that in order to challenge (i.e., seek a refund of) the 3% surtax on dividends, an administrative claim must be filed with the French tax authorities before 31 December of the second year following the year in which the 3% surtax was paid.


For more information, contact a tax professional with Fidal* in France or with KPMG in the United States:

Gilles Galinier-Warrain | +33 1 55 68 16 54 |

Olivier Ferrari | +33 1 55 68 18 14 |

Laurent Leclercq | +33 1 55 68 16 42 |

Patrick Seroin | +1 (212) 954-2523 |


* Fidal is a French law firm that is independent from KPMG and its member firms.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal