Clifford Chance

Finance Act for 2025 – Strengthening Anti-Abuse Provisions against Dividend Stripping Schemes

25 February 2025

The Finance Act for 2019 originally introduced anti-abuse measures in French domestic tax law under Article 119 bis A of the French tax code ("FTC") to combat dividend stripping schemes put in place to avoid withholding tax on French source dividends. While the French tax authorities ("FTA") have been trying to tackle transactions of this nature over the last few months through various proceedings, those anti-abuse measures proved to lack efficiency, notably due to their scope considered too narrow. In this context, the Finance Act for 2025 intends to considerably strengthen the legal means to address those schemes, namely through (i) including the concept of "beneficial ownership" in the general provisions governing the French withholding tax on dividend distributions (art. 119 bis of the FTC) and (ii) widening the scope of the anti-abuse rules (art. 119 bis A of the FTC).

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