Over-charged French withholding tax on dividends?

Somerset_Alan

TL;DR: My dividend paid in UKP has had 25% deducted by Computershare before payment. Shouldn't it be lower than this due to the tax treaty with France?

The longer version, with background. I have shares in a French company traded in Euros. The shares were obtained while working for a UK subsidiary of the French company, as a HMRC-approved Share Incentive Plan and the scheme holding was managed by a trustee.

On retiring, I had to move my holding out of the scheme and my shares were moved to a Computershare nominee account. I received a dividend payment from Computershare, and 25% tax has been deducted by Computershare and (presumably) remitted to the French tax authority.

By my reading of the summary of the double taxation treaty, I thought the maximum rate should be 15%, or possibly even 0%. See: https://www.gov.uk/hmrc-internal-manuals/double-taxation-relief/dt7264

Thus I believe I should be able to get some or even all of the tax back from the French authority.

As a historical note, years ago when there was a different trustee, dividends were paid net of Withholding Tax at 30%, but I was provided with forms to reclaim some of this tax. Later the Custodian reached an agreement with the French authority that the tax would be levied at 15% and no refund was payable. Later, when the Trustee changed, they stated that they had not received sufficient assurances from the Custodian to continue applying the lower rate, so it went back up to 30% and there was no mechanism to reclaim anything.

Now that my shares are no longer held by the Custodian of the scheme, but are simply held by Computershare as nominee, should Computershare be able to apply the lower rate, or if not is there any way I can reclaim this?

Am I getting this right, or am I sadly wrong?

eskbanker

My understanding of such double taxation treaties is that they avoid duplicated liabilities for the same income, so if you've paid tax in France you can offset that against any tax liability on that income in the UK, if that's where you're resident, rather than reclaiming it as such.

wmb194

https://forums.moneysavingexpert.com/discussion/6654465/over-charged-french-withholding-tax-on-dividends

25% is France's default rate for non-residents. Because for some reason countries in Europe don't have the US equivalents of W8-BEN forms if you want the treaty rate you usually need to apply to the French tax authorities for a partial refund (the difference between 25% and 15%). Last I checked, the problem is that France wants lots of documentation including a stamped letter from your broker which may or may not be a problem. I've given up reclaiming excess French dividend taxes but for me the amounts are small.

https://www.linkedin.com/pulse/france-dividend-withholding-tax-reclaim-full-guide-non-residents-t81be/

wmb194

https://forums.moneysavingexpert.com/discussion/comment/81876005#Comment_81876005

Only up to the treaty rate, though. I.e. in this case, HMRC will give you relief on 15% but not the full 25%. It's up to you to reclaim the difference.

Somerset_Alan

Thank you eskbanker and wmb194 for your responses. It sounds as though the procedure (Form 5000) is the same as it was years ago when I had to do it; although the form's name has changed (it was RF 4GB back then). It was really quite small amounts (£20-£30) but I did it as much for the principle as anything else. The difference was that Mourant (and later Capita) provided the forms, already completed with much of the required information - all I had to do was get a stamp from HMRC and return the forms to Mourant or Capita.

Unless Computershare are going to provide some support, it's unlikely that I'll be able to make a claim for the refund. I have a chronic condition that makes it very difficult to concentrate on anything for long.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81876065#Comment_81876065

Realistically, unless the dividend is substantial enough to justify the headache of recovery of the foreign tax, I would write it off.

In my case, I had investments in French, German and Swiss listed dividend paying stocks and encountered significant problems in recovering the excess tax deducted in those jurisdictions. In the end sold them all since the net dividends after tax coupled with the fairly average capital returns, simply did not justify retaining them. Also made my self assessment tax reporting a little less tedious.

Somerset_Alan

It's a few hundred each time - so maybe worth trying, on a good day. I believe there's no hurry. On the other hand, my initial foray into the world of www.impots.gouv.fr. hasn't been very encouraging!

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81876279#Comment_81876279

Fair enough, but dont overlook France's rather short 2 year deadline to initiate a claim - see below

https://blog.wtax.co/wtax-blog/the-race-to-withholding-tax-recovery-statutes-of-limitations#:~:text=August%206%2C%202020,the%20date%20of%20dividend%20payment.

LITRG

Hi Somerset_Alan.

You might find our guidance on double taxation and getting help with tax useful.

Double taxation | Low Incomes Tax Reform Group

Help with tax from friends, family, professionals or other organisations | Low Incomes Tax Reform Group