A-6.002, r. 2 - Regulation respecting implementation of the tax agreement between the Gouvernement du Québec and the Gouvernement de la République française for the purposes of avoiding double taxation and preventing evasion of taxes on income

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chapter A-6.002, r. 2
Regulation respecting implementation of the tax agreement between the Gouvernement du Québec and the Gouvernement de la République française for the purposes of avoiding double taxation and preventing evasion of taxes on income
REVENUE — TAX AGREEMENT —QUÉBEC-FRENCH REPUBLIC
Tax Administration Act
(chapter A-6.002, s. 96)
A-6.002
September 1 2012
The title of the Act was formerly entitled:«An Act respecting the Ministère du Revenu». The title of this Act was replaced by section 91 of chapter 31 of the statutes of 2010.
O.C. 422-88; S.Q. 2010, c. 31, s. 91.
1. The Tax Agreement between the Gouvernement du Québec and the Gouvernement de la République française for the purposes of avoiding double taxation and preventing evasion of taxes on income, the text of which is reproduced in Schedule A, applies to Québec, subject to section 2.
O.C. 422-88, s. 1; Erratum, 1988 G.O. 2, 3779.
2. Article 29 of the Agreement mentioned in section 1 fixes the date of entry into force thereof and the date on which it takes effect in Québec in respect of the persons covered by it.
O.C. 422-88, s. 2.
3. (Omitted).
O.C. 422-88, s. 3.
TAX AGREEMENT BETWEEN THE GOUVERNEMENT DU QUÉBEC AND THE GOUVERNEMENT DE LA RÉPUBLIQUE FRANÇAISE
for the purposes of avoiding double taxation and preventing evasion of taxes on income
The Gouvernement du Québec
and
the Gouvernement de la République française,
wishing to make an Agreement for the purposes of avoiding double taxation and preventing evasion of taxes on income
have agreed as follows:
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of the Contracting Parties.
ARTICLE 2
Taxes Covered
(1) This Agreement shall apply to taxes on income imposed on behalf or each Contracting Party, irrespective of the manner in which they are levied.
(2) There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.
(3) The existing taxes to which the Agreement shall apply are:
(a) in the case of France:
the income tax, the corporation tax, including any with-holding tax, prepayment or advance payment with respect to the aforesaid taxes, (hereinafter referred to as “French tax”);
(b) in the case of Québec:
the income taxes imposed by the Gouvernement du Québec (hereinafter referred to as “Québec Taxes”).
(4) The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The Contracting Parties shall notify each other of any important changes which have been made in their respective taxation laws.
ARTICLE 3
General Definitions
(1) In this Agreement:
(a) the term “a Contracting Party” or “the other Contracting Party” means, as the context requires, Québec or France;
(b) the term “person” includes an individual, a company or any other body of persons, and in the case of Québec, a partnership, an estate and a trust;
(c) the term “company” means any body corporate or any other entity which is treated as a body corporate for tax purposes; it also means a “corporation” within the meaning of Canadian and Québec law;
(d) the terms “enterprise of a Contracting Party” and “enterprise of the other Contracting Party” mean respectively an enterprise carried on by a resident of a Contracting Party and an enterprise carried on by a resident of the other Contracting Party;
(e) the term “competent authority” means:
i. in the case of France, the Minister responsible for the budget or his authorized representative;
ii. in the case of Québec, the Minister of Revenue or his authorized representative;
(f) the term “tax” means Québec tax or French tax, as the context requires;
(g) the term “national” means:
i. any individual possessing the French or Canadian nationality and, in the latter case, a resident of Québec;
ii. any legal person, partnership and association deriving its status as such from the law in force in a Contracting Party.
(2) As regards the application of the Agreement by a Contracting Party, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting Party relating to the taxes which are the subject of the Agreement.
ARTICLE 4
Fiscal Domicile
(1) For the purposes of this Agreement, the term “resident of a Contracting Party” means any person who, under the law of that Party, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
(2) Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting Parties, then this case shall be determined in accordance with the following rules:
(a) he shall be deemed to be a resident of the Contracting Party in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting Parties, he shall be deemed to be a resident of the Contracting Party with which his personal and economic relations are closest (hereinafter referred to as his “centre of vital interests”);
(b) if the Contracting Party in which he has his centre of vital interests cannot be determined or if he has not a permanent home available to him in either Contracting Party, he shall be deemed to be a resident of the Contracting Party in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting Parties or in neither of them, he shall be deemed to be a resident of France where he possesses French nationality or Québec where he possesses Canadian nationality;
(d) if he possesses both French and Canadian nationality or neither of them, the competent authorities of the Contracting Parties shall settle the question by mutual agreement.
(3) Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting Parties, the competent authorities of the Contracting Parties shall by mutual agreement endeavour to settle the question.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business in which the business of the enterprise is wholly or partly carried on.
(2) For the purposes of paragraph 1, the term “permanent establishment” shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) a building site or construction or assembly project or a place of prospecting for natural resources which exists for more than 12 months.
(3) A permanent establishment is not deemed to exist where:
(a) the installations are used solely for stocking, display or delivery of merchandise belonging to the enterprise;
(b) merchandise belonging to the enterprise is stored solely for stocking, display or delivery;
(c) merchandise belonging to the enterprise is stored solely for processing by another enterprise;
(d) a fixed business installation is used solely to purchase merchandise or to gather information for the enterprise;
(e) a fixed business installation is used for the enterprise solely for advertising, supplying information, scientific or similar activities of a preparatory or auxiliary nature.
(4) A person, other than an agent having independent status covered by paragraph 5, acting in a Contracting Party on behalf of an enterprise of the other Contracting Party shall be deemed to be a “permanent establishment” in the first Party:
(a) if he possesses powers in that first Party that he habitually exercises there enabling him to sign contracts on behalf of the enterprise, unless that person’s activity is restricted to the purchase of merchandise for the enterprise; or
(b) if the person possesses in that first Party a stock of merchandise belonging to the enterprise by means of which it habitually fills orders on behalf of that enterprise.
(5) An enterprise of a Contracting Party is not deemed to have a permanent establishment in the other Contracting Party solely by reason of the fact that it carries on an activity there through a broker, a commissioner general or any other intermediary having an independent status, where such persons act within the ordinary bounds of their activity.
(6) The fact that a company that is a resident of a Contracting Party controls or is controlled by a company which is a resident of the other Contracting Party, or which carries on business in that other Party (whether through a permanent establishment or otherwise) shall not of itself constitute for either company a permanent establishment of the other.
ARTICLE 6
Income From Immovable Property
(1) Income from immovable property including income from agriculture of forestry may be taxed in the Contracting Party in which such property is situated.
(2) For the purposes of this Agreement, the term “immovable property” shall be defined in accordance with the law of the Contracting Party in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources: ships and aircraft shall not be regarded as immovable property. In the case of France, the term “law of the Contracting Party” shall mean French taxation laws.
(3) The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property and to profits from the alienation of such property.
(4) The provisions of paragraphs 1 and 3 shall also apply to the income from the immovable property of an enterprise and to income from immovable property used for the performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of a Contracting Party shall be taxable only in that Party unless the enterprise carries on business in the other Contracting Party through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other Contracting Party but only so much of them as is attributable to that permanent establishment.
(2) Subject to the provisions of paragraph 3, where an enterprise of a Contracting Party carries on business in the other Contracting Party through a permanent establishment situated therein, there shall in each Contracting Party be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
(3) In the determination of the profits of a permanent establishment, there shall be allowed those deductible expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses, whether incurred in the Party in which the permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
(5) For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
(6) Where profits include items of income which are dealt with separately in other Articles of this Agreement, then, the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
Shipping and Air Transport
(1) Profits derived by an enterprise of a Contracting Party from the operation of ships or aircraft in international traffic shall be taxable only in that Party.
(2) Notwithstanding the provisions of paragraph 1 of this Article and Article 7, profits derived from the operation of ships or aircraft used principally to transport passengers or merchandise exclusively between places in a Contracting Party may be taxed in that Party.
(3) The provisions of paragraphs 1 and 2 shall also apply to profits referred to in those paragraphs derived by an enterprise of a Contracting Party from its participation in a pool, a joint business or in an international operating agency.
(4) In this Agreement, the profits derived by an enterprise of a Contracting Party from the operation of ships or aircraft in international traffic include profits derived from:
(a) the letting of ships or aircraft operated in international traffic;
(b) the use, maintenance or letting of containers (including trailers and related equipment for the transport of containers) used in international traffic;
(c) the letting of ships, aircraft or containers (including trailers and related equipment for the transport of containers), provided that such profits are incidental to the profits covered by paragraph 1, 4 a or 4 b.
(5) Notwithstanding the provisions of Article 2, paragraph 3, air transport enterprises in Québec, whose aircraft embark or disembark passengers or goods in French territory, shall not be subject to the professional services tax so long as air transport enterprises in France are not subject to a similar tax in Québec.
ARTICLE 9
Associated Enterprises
(1) Where:
(a) an enterprise of a Contracting Party participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting Party, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a contracting Party and an enterprise of the other Contracting Party,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
(2) Where profits on which an enterprise of a Contracting Party has been charged to tax in that Party are also included in the profits of an enterprise of the other Contracting Party and taxed accordingly, and the profits so included are profits which would have accrued to that enterprise of the other Party, if the conditions made between the enterprises had been those which would have been made between independent enterprises, then the first-mentioned Party shall make an appropriate adjustment to the amount of tax charged on those profits in the first-mentioned Party. In determining such an adjustment due regard shall be had to the other provisions of this Agreement in relation to the nature of the income.
3. A contracting Party shall not change the profits of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its national laws and, in any case, after five years from the end of the year in which the profits which would be subject to change would have accrued to an enterprise of that Party. This paragraph shall not apply in the case of fraud or wilful default.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of a Contracting Party to a resident of the other Contracting Party may be taxed in that other Party.
(2) However, where the company paying dividends is a resident of France, such dividends shall be taxable in France in accordance with French legislation; but if the person resident in Québec receiving the dividends is the beneficial owner, the tax so levied may not exceed:
(a) 10% of the gross amount of the dividends if the beneficial owner is a Québec company (other than a partnership) holding directly or through a partnership not less than 10 % of the voting shares of the French company paying dividends;
(b) 15% of the gross amount of the dividends in all other cases.
The provisions of this paragraph shall not affect the taxation of the company on the profits out of which the dividends are paid.
(3) The term “dividends” used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income assimilated to income from shares by the taxation law of the Party of which the company making the distribution is a resident.
(4) The provisions of paragraph 2 shall not apply if the recipient of the dividends, being a resident of a Contracting Party, carries on in the other Contracting Party of which the company paying the dividends is a resident, a trade or business through a permanent establishment situated therein, or performs in that other Party professional services from a fixed base situated therein, and the holding by virtue of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) A resident of Québec who receives dividends paid by a company which is a resident of France shall be entitled to the refund of the prepayment, if any, paid in respect of the dividends by the company making the distribution, subject to the deduction of the withholding tax on the refunded amounts in accordance with paragraph 2.
(6) Where a company is a resident of only one Contracting Party, the other Contracting Party may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Party, or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Contracting Party, nor may it subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Party.
(7) Notwithstanding any provision of this Agreement, a company which is a resident of Québec and which has a permanent establishment in France shall remain subject to the withholding tax in accordance with the provisions of French law, but the rate of such tax shall not exceed 10%.
ARTICLE 11
Interest
(1) Interest arising in a Contracting Party and paid to a resident of the other Contracting Party may be taxed in that other Party.
(2) However, such interest arising in France may be taxed in France according to French law, but if the beneficial owner of the interest is a resident of Québec, the tax so charged may not exceed 10% of the gross amount of the interest.
(3) Notwithstanding the provisions of paragraph 2, interest obtained from France and paid to a resident of Québec who is the beneficial owner thereof is taxable in Québec only to the extent that such interest:
(a) is a late payment penalty;
(b) is paid by the Bank of France to the Québec Minister of Finance, or
(c) is paid by the purchasing enterprise to the selling enterprise linked with a sale on credit of equipment or merchandise, except where the sale took place between enterprises associated within the meaning of article 9 paragraph 1 a or b.
(4) Notwithstanding the provisions of paragraph 2,
(a) interest from France paid to a resident of Québec who is the beneficial owner in the form of a bond, note, order or other similar security issued by France or by any of its local governments shall be taxable only in Québec;
(b) interest from France paid to a resident of Québec is taxable only in Québec if it is paid by reason of a loan made or guaranteed or credit provided or guaranteed by a Québec government agency whose purpose is to promote exports.
(5) The term “interest” used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation law of the Party in which the income arises; but does not include income dealt with in Article 10.
(6) The provisions of paragraphs 2, 3 and 4 shall not apply if the recipient of the interest, being a resident of a Contracting Party, carries on in the other Contracting Party in which the interest arises a trade or business through a permanent establishment situated therein, or performs in that other Party professional services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
(7) The interest shall be deemed to arise in a Contracting Party when the payer is that Party itself, a local authority or a resident of that Party. Where, however, the person paying the interest, whether he is a resident of a Contracting Party or not, has in a Contracting Party a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting Party in which the permanent establishment or fixed base is situated.
(8) Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of interest paid, having regard to the debtclaim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting Party, due regard being had to the other provisions of this Agreement.
ARTICLE 12
Royalties
(1) Royalties arising in a Contracting Party and paid to a resident of the other Contracting Party may be taxed in that other Party.
(2) However, royalties arising in France may be taxed in France according to French law, but if the beneficial owner of such royalties is a resident of Québec, the tax so charged shall not exceed 10% of the gross amount of the royalties.
(3) Notwithstanding the provisions of paragraph 2,
(a) copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or artistic work (but not including royalties in respect of motion picture films and works on film, videotape or other means of reproduction for use in connection with television) arising in France and paid to a resident of Québec who is subject to tax thereon shall be taxable only in Québec;
(b) royalties arising in France and paid to the Gouvernement du Québec or to a body of Québec approved by the competent authorities of the two Contracting Parties, shall be taxable only in Québec.
(4) Notwithstanding the provisions of paragraph 2, royalties related to cultural motion picture films arising in France and paid to a resident of Québec who is subject to tax therein in respect thereof shall be taxable only in Québec.
This provision shall apply to royalties paid to a resident of Québec in respect of films wholly or principally directed and produced in Québec and which are included in the list of films prepared by the Société générale du cinéma.
(5) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including motion picture films, any patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment.
(6) The provisions of paragraphs 2, 3 and 4 shall not apply if the recipient of the royalties, being a resident of a Contracting Party, carries on in the other Contracting Party in which the royalties arise a trade or business through a permanent establishment situated therein, or performs in that other Party professional services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
(7) Royalties shall be deemed to arise in a Contracting Party when the payer is that Party itself, a resident of that Party or a local authority of that Party. Where, however, the person paying the royalties, whether he is a resident of a Contracting Party or not, has in a Contracting Party a permanent establishment or fixed base in connection with which the obligation to pay the royalties was incurred, and those royalties are borne by that permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting Party in which the permanent establishment or fixed base is situated.
(8) Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipients in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the laws of each Contracting Party, due regard being had to the other provisions of this Agreement.
ARTICLE 13
Gains from the Alienation of Property
(1) (a) Gains from the alienation of immovable property may be taxed in the Contracting Party in which such property is situated.
(b) Gains from the alienation of shares of the capital stock of a company the assets of which consist principally of immovable property situated in a Contracting Party may be taxed in that Party.
(c) Gains from the alienation of an interest in a partnership or a trust the assets of which consist principally of immovable property situated in a Contracting Party may be taxed in that Party.
(d) Within the meaning of subparagraphs b and c of this paragraph, the term “immovable property” means the shares of a company the value of which is derived principally from immovable property or an interest in a partnership or trust the value of which is derived principally from immovable property, but does not include property other than rental property used in carrying on the activities of the company, partnership or trust.
(2) Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting Party has in the other Contracting Party or of movable property pertaining to a fixed base available to a resident of a Contracting Party in the other Contracting Party for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed in that other Party. However, gains from the alienation of ships or aircraft operated in international traffic by an enterprise of a Contracting Party or of movable property pertaining to the operation of such ships or aircraft shall be taxable only in that Contracting Party.
(3) Gains from the alienation of
(a) shares forming part of a substantial interest in the capital stock of a company which is a resident of France, or
(b) an interest in a partnership which is a resident of France,
may be taxed by France; but the tax so charged shall not exceed 25% of the amount of the gain. For the purposes of this paragraph, a substantial interest exists when the alienator, alone or together with associated persons, owns directly or indirectly 25% or more of the shares of any class of the capital stock of a company.
(4) Gains from the alienation of any property, other than those mentioned in paragraph 1, 2 and 3, shall be taxable only in the Contracting Party of which the alienator is a resident.
(5) The provisions of paragraph 4 shall not affect the right of a Contracting Party to tax according to its law gains derived by an individual resident in the other Contracting Party from the alienation of any property if the alienator:
(a) is a French national where the first-mentioned Party is France or a Canadian national where the first-mentioned Party is Québec or was a resident of that first-mentioned Party for ten years or more prior to the alienation of the property, and
(b) was a resident of that first-mentioned Contracting Party at any time during the five years immediately preceding such alienation.
ARTICLE 14
Professional Services
(1) Income derived by a resident of a Contracting Party in respect of professional services or other independent activities of a similar character shall be taxable only in that Party unless he has a fixed base regularly available to him in the other Contracting Party for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other Contracting Party but only so much of it as is attributable to that fixed base.
(2) The term “professional services” includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, notaries, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting Party in respect of an employment shall be taxable only in that Party unless the employment is exercised in the other Contracting Party. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Party.
(2) Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting Party in respect of an employment exercised in the other Contracting Party shall be taxable only in the first-mentioned Party if
(a) the recipient is present in the other Party for a period or periods not exceeding in the aggregate 183 days in any twelve-month period, and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Party, and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Party.
(3) Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting Party, shall be taxable only in that Party.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of a Contracting Party in his capacity as a member of the board of directors, board of trustees or a similar organ of a company which is a resident of the other Contracting Party, may be taxed in that other Party.
ARTICLE 17
Artists and Athletes
(1) Notwithstanding the provisions of Articles 7, 14 and 15, income derived by entertainers, such as theatre, motion picture, radio or television artists, and musicians, and by athletes, from their personal activities as such may be taxed in the Contracting Party in which these activities are exercised.
(2) Where income in respect of personal activities as such of an entertainer or athlete accrues not to that entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting Party in which the activities of the entertainer or athlete are exercised.
(3) The provisions of paragraph 2 shall not apply if the entertainer or the athlete establishes that neither he, nor any person associated with him or related to him, participates directly or indirectly in the profits of the person referred to in that paragraph.
ARTICLE 18
Pensions and Annuities
(1) Periodic or non-periodic pensions and other similar allowances arising in a Contracting Party and paid in respect of past employment to a resident of the other Contracting Party shall be taxable only in the Contracting Party in which they arise.
(2) (a) Pensions referred to in paragraphs 4, 5 and 6 of Article 81 of the French General Tax Code (Code général des impôts français) shall be exempt from Québec tax so long as they are exempt from French tax.
(b) Pensions and allowances received from Québec under any of its laws shall, notwithstanding the provisions of paragraph 1(c) of Article 22, be excluded from the bases used for the computation of French tax, so long as they are exempt from Québec tax.
(3) Annuities arising in a Contracting Party and paid to a resident of the other Contracting Party may be taxed only in the Party in which they arise. The term “annuities” means stated sums payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
(4) Alimony and other similar payments arising in a Contracting Party and paid to a resident of the other Contracting Party who is subject to tax therein in respect thereof, shall be taxable only in that other Party.
ARTICLE 19
Government Service
(1) (a) Remuneration paid by a Contracting Party or a local authority thereof to any individual in respect of services rendered to that Party or local authority thereof shall be taxable only in that Party.
(b) However, such remuneration shall be taxable only in the Contracting Party of which the recipient is a resident if the services are rendered in that Party and if the recipient
i. is a French national where the said Party is France and a Canadian national where the Party is Québec, or
ii. did not become a resident of that Party solely for the purpose of performing the services.
(2) The provisions of paragraph 1 shall not apply to remuneration in respect of services rendered in connection with any trade or business carried on by one of the Contracting Parties or a local authority thereof.
ARTICLE 20
Students, Apprentices and Business Trainees
Payments which a student, apprentice or business trainee who is, or was immediately before visiting one of the Contracting Parties, a resident of the other Contracting Party and who is present in the first-mentioned Contracting Party solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that first-mentioned Party, provided that such payments are made to him from sources outside that Party.
ARTICLE 21
Income not Expressly Mentioned
(1) Subject to the provisions of paragraph 2 of this Article, items of income of a resident of a Contracting Party which are not expressly mentioned in the foregoing Articles of this Agreement shall be taxable only in that Party.
(2) However, if such income is derived by a resident of Québec from sources in France, it shall be taxable in France according to French law.
ARTICLE 22
Elimination of Double Taxation
(1) In the case of France, double taxation shall be avoided as follows:
(a) income other than that mentioned in subparagraph (b) below shall be exempt from the French tax mentioned in paragraph 3 of Article 2 while the income is, under the Agreement, taxable in Québec;
(b) as regards income mentioned in Articles 16 and 17 which has borne Québec tax in accordance with the provisions of those Articles, France shall allow to a resident of France receiving such income from Québec a tax credit corresponding to the amount of tax levied in Québec. Such tax credit shall be allowed against taxes mentioned in paragraph 3 of Article 2, in the bases of which such income is included. The aggregate of such tax credit and the credit corresponding to the tax payable to the Government of Canada may not exceed the amount of French tax levied on such income;
(c) notwithstanding the provisions of subparagraphs a and b French tax may be computed on income chargeable in France by virtue of this Agreement at the rate appropriate to the total of the income chargeable in accordance with French laws.
(2) In the case of Québec double taxation shall be avoided as follows:
(a) subject to the existing provisions of the law of Québec regarding the deduction from tax payable in Québec of tax paid in a territory outside Québec and to any subsequent modification of those provisions (which shall not affect the principle hereof), and unless a greater deduction or relief is provided under the law of Québec, French tax payable under the law of France and in accordance with this Agreement on profits, income or gains arising in France shall be deducted from any Québec tax payable in respect of such profits, income or gains up to the portion of such tax that is not deducted from the tax payable to the Government of Canada;
(b) subject to the existing provisions of the law of Québec regarding the determination of the exempt surplus of a foreign affiliate and to any subsequent modification of those provisions (which shall not affect the principle hereof) for the purpose of computing Québec tax, a company resident in Québec shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate resident in France.
For the purpose of computing the exempt surplus of a foreign affiliate resident in France, profits derived from a permanent establishment of that company situated in an Overseas Territory of the French Republic shall be deemed to be derived from France.
3. For the application of this Article, profits, income or gains of a resident of a Contracting Party having borne tax of the other Contracting Party in accordance with this Agreement shall be deemed to arise from sources in that other Party.
ARTICLE 23
Non-Discrimination
(1) The nationals of a Contracting Party shall not be subjected in the other Contracting Party to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other Party in the same circumstances are or may be subjected.
(2) The taxation on a permanent establishment which an enterprise of a Contracting Party has in the other Contracting Party shall not be less favourably levied in that other Party than the taxation levied on enterprises of that other Party carrying on the same activities.
(3) Nothing in this Article shall be construed as obliging a Contracting Party to grant to residents of the other Contracting Party any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
(4) In this Article, the term “taxation” means the taxes which are the subject of this Agreement.
ARTICLE 24
Mutual Agreement Procedure
(1) Where a resident of a Contracting Party considers that the actions of one or both of the Contracting Parties result or will result for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the national laws of those Parties, present his case to the competent authority of the Contracting Party of which he is a resident. The case must be submitted within two years from the first notification of the action which gives rise to taxation not in accordance with the Agreement.
(2) The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting Party, with a view to the avoidance of taxation not in accordance with the Agreement.
(3) A Contracting Party shall not, after the expiry of the time limits provided in its national laws and, in any case, after five years from the end of the taxation year in which the income concerned has accrued, increase the tax base of a resident of either of the Contracting Parties by including therein items of income which have also been charged to tax in the other Contracting Party; this provision does not apply in case of fraud or wilful default.
(4) The competent authorities of the Contracting Parties shall endeavour to resolve by mutual agreement any difficulties arising as to the application of the Agreement. In particular, the competent authorities of the Contracting Parties may consult together to endeavour to agree:
(a) to the same attribution of profits to a resident of a Contracting Party and its permanent establishment situated in the other Contracting Party;
(b) to the same allocation of income between a resident of a Contracting Party and any associated person provided for in Article 9.
(5) The competent authorities of the Contracting Parties may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting Parties.
ARTICLE 25
Exchange of Information
(1) The competent authorities of the Contracting Parties shall exchange such information as is necessary for the carrying out of this Agreement or for the prevention of fraud or fiscal evasion in relation to the taxes which are the subject of this Agreement. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons or authorities other than those concerned with the assessment or collection of the taxes which are the subject of this Agreement.
(2) In no case shall the provisions of paragraph 1 be construed so as to impose on one of the Contracting Parties the obligation:
(a) to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting Party;
(b) to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting Party;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
ARTICLE 26
Diplomatic and Consular Officials or Comparable Categories
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic or consular missions or comparable categories of the French Republic in Québec or of the Délégation générale du Québec in Paris.
ARTICLE 27
Territorial Scope
(1) This Agreement shall apply, with respect to France, to the European and Overseas Departments (Guadeloupe, Guyane, Martinique and Réunion) of the French Republic.
(2) This Agreement may be extended, either in its entirety or with any necessary modifications, to the Overseas Territories of the French Republic which impose taxes substantially similar in character to those to which the Agreement applies. Any such extension shall take effect from such date and subject to such modifications and conditions, including conditions as to termination, as may be specified and agreed between the Contracting Parties in notes to be exchanged through diplomatic channels or in any other manner in accordance with their constitutional procedures.
(3) Unless otherwise agreed by both Contracting Parties, the termination of the Agreement by one of the Contracting Parties under Article 30 shall terminate, in the manner provided for in that Article, the application of the Agreement to any territory to which it has been extended under this Article.
ARTICLE 28
Miscellaneous Rules
(1) Nothing in this Agreement shall be construed as preventing Québec from imposing a tax on amounts included in the income of a resident of Québec according to section 580 of the Taxation Act.
(2) An individual who is a resident of a Contracting Party and who maintains one or several abodes in the territory of the other Contracting Party shall not be subject in that other Party to an income tax according to an imputed income based on the rental value of that or those abodes.
(3) The competent authorities of the Contracting Parties shall by mutual agreement settle the mode of application of the Agreement.
(4) Although a permanent establishment in a Contracting Party owned by an enterprise of the other Contracting Party may not be deemed to be a resident of the first-mentioned Contracting Party within the meaning of Article 4, it is understood that a permanent establishment of a bank or other financial and credit institution situated in Québec having its head office in France may, in respect of interest derived from France, benefit from the tax exemptions or reductions provided for in paragraphs 2, 3 and 4 of Article 11 and, where appropriate, from the tax credit mentioned in Article 22, when the debt-claim in respect of which such interest is paid is connected with such permanent establishment and relates to its normal activity.
(5) Contributions for a year in respect of services rendered during that year paid by, or on behalf of, an individual who is a resident of one of the contracting Parties or who is temporarily present in that Party, to a pension plan recognized for tax purposes in the other Contracting Party shall, during a period not exceeding in the aggregate 60 months, be treated in the same way for tax purposes in the first-mentioned Party as contributions paid to a pension plan (except an employee benefit plan in the case of Québec) that is recognized for tax purposes in the first-mentioned Party, provided that:
(a) such individual contributed to the pension plan before he became a resident of or temporarily present in the first-mentioned Party; and
(b) the competent authority of the first-mentioned Party agrees that the pension plan corresponds to a pension plan recognized for tax purposes by that Party.
For the purposes of this paragraph, “pension plan” includes a pension plan created under a public social security system.
(6) France agrees to re-open negotiations on Articles 10, 11 and 12 of this Agreement in the case where Québec should wish to amend the rules for taxing the income concerned.
ARTICLE 29
Entry into Force
(1) Each of the Contracting Parties shall notify to the other the completion of the procedure required by its laws for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect:
(a) in France:
i. for the withholding tax and the prepayment (précompte) relating to any amounts payable on or after the first day of January in the calendar year in which the Agreement enters into force;
ii. in respect of the corporation tax, for any financial year beginning on or after the first day of January in the calendar year in which the Agreement enters into force; and
iii. in respect of the income tax, for any taxation year beginning on or after the first day of January in the calendar year in which the Agreement enters into force.
(b) in Québec:
i. in respect of companies, for any financial year beginning on or after the first day of January in the calendar year in which the Agreement enters into force, and
ii. in other cases, for any taxation year beginning on or after the first day of January of the said year.
ARTICLE 30
Termination
This Agreement shall continue in effect indefinitely but either Contracting Party may, on or before June 30 in any calendar year after the year 1987, give notice of termination to the other Contracting Party and, in such event, the Agreement shall cease to have effect:
(a) in France:
i. for the withholding tax and the prepayment (précompte) relating to any amounts payable on or after the first day of January in the calendar year next following that in which the notice is given,
ii. in respect of the corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following that in which the notice is given, and
iii. in respect of the income tax, for any taxation year beginning on or after the first day of January in the calendar year next following that in which the notice is given.
(b) in Québec:
i. in respect of companies, for any financial year beginning on or after the first day of January in the calendar year next following that in which the notice is given;
ii. in other cases, for any taxation year beginning on or after the first day of January in the said year.
IN WITNESS WHEREOF the undersigned have signed this Agreement.
Done in duplicate at Québec, this first day of September 1987.
ROBERT BOURASSA
Gouvernement du Québec
J. CHIRAC
Gouvernement de la
République française
O.C. 422-88, Sch. A; Erratum, 1988 G.O. 2, 3779.
REFERENCES
O.C. 422-88, 1988 G.O. 2, 1547 and 3779