FRANCE LAW AND PRACTICE Contributed by: Michael Doumet, François-Xavier Naime, Guillaume Nataf, Léna Sersiron, Eléonore d’Anthonay, Nella Picou, Pauline Celeyron and Magalie Dansac Le Clerc, Baker McKenzie Paris
As regards proceeds distributed abroad, see 9.2 With- holding Taxes on Dividends, Interest, Etc . 9.5 Anti-Evasion Regimes General Anti-Abuse and Evasion Rules French tax law includes several general anti-abuse measures targeting fictitious acts or arrangements primarily motivated by tax considerations. Under the abuse of law ( abus de droit ) doctrine, the French tax authorities (FTAs) may disregard acts that are fictitious or defeat the intended purpose of a legal provision with an exclusively tax-related purpose, subject to penal - ties up to 80%. The “mini”-abuse of law extends the FTAs’ powers to disregard acts that have a primarily tax-driven purpose and offer only marginal economic benefit compared to the tax advantages they provide. Certain preferential tax regimes are subject to spe - cific anti-abuse rules targeting fraudulent schemes and absence of substance (eg, the parent-subsidiary regime specific anti-abuse rule). Flows involving resi - dents of NCJs are generally subject to a 75% with - holding tax rate (on capital gains and dividends) and denied tax deductibility or exclusion from certain tax regimes. Additionally, application of double tax treaties can be denied if obtaining treaty benefits was the main purpose of an arrangement or if the recipient of an income is not the beneficial owner. CFC Rules French controlled foreign corporation (CFC) rules apply to foreign profits earned by branches and sub - sidiaries that are more than 50% owned and estab - lished in tax-privileged countries. A country is con - sidered tax privileged if the payable CIT is less than 40% of what would have been due if the company or business were established in France. Under CFC rules, profits are subject to CIT in France in proportion to the French resident company’s shareholding. A safe harbour clause applies to establishments that are not primarily tax driven. Hybrid Rules Anti-hybrid rules, in line with the EU’s Anti-Tax Avoid - ance Directive (“ATAD 2”), neutralise hybrid mis - match arrangements – notably, where payments are
tax deductible in one jurisdiction but not taxable in another. Transfer Pricing Rules Transfer pricing rules require transactions between affiliated enterprises to follow the arm’s length princi - ple, allowing FTAs to adjust taxable income accord - ingly. Companies must maintain documentation to demonstrate that all transactions comply with the arm’s length principle. Pillar Two Rules France transposed into domestic law a domestic top- up tax, as well as the Income Inclusion Rule and the Undertaxed Payment Rule, in order to ensure a global minimum taxation level for multinational corporations and large-scale national groups. 10. Employment and Labour 10.1 Employment and Labour Framework Employment and Labour Legal Framework in France France has one of the most structured and employ - ee-centric labour law systems in the world. Employ - ment and labour matters are governed by the French labour code, supplemented by company collective agreements, case law, EU regulations and collective bargaining agreements. Notably, this framework regu - lates employment contracts, working time, dismiss - als (or, more generally, terminations), workplace safety Employment relationships are formalised through written contracts, either permanent ( contrat à durée indéterminée , or CDI) or fixed-term ( contrat à durée déterminée , or CDD). These contracts must comply with statutory requirements and applicable collective agreements, specifying essential terms such as job title, salary, and working hours. Working time and employee benefits. Employment contracts In principle, France has a 35-hour statutory working week, with overtime subject to additional compensa - tion.
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