Expats in France and Hong Kong are celebrating the news that a double taxation treaty has been put in place between the two countries.
The 46-page agreement, which was signed on October 21st by Hong Kong financial secretary John Tsang and the French minister of economy, industry and employment, Christine Lagarde, is aimed at creating a taxation policy that prevents the double taxation of individuals who have financial links with both countries. Such measures, it is hoped, will encourage higher levels of investments by expatriates.
The agreement applies to different taxes for the two different territories. For France, the agreement is related to income tax, corporate tax, social security tax, and the wealth tax. For Hong Kong, the agreement addresses profits tax, salary tax, and property tax.
Expatriates, many of whom were previously forced to pay tax in both jurisdictions and faced significant tax bills, have welcomed the treaty. Discussing the impact of the agreement between France and Hong Kong, David Anderson a taxation expert at Sykes Anderson told UK newspaper, The Telegraph:
"This double tax treaty will encourage Hong Kong investors to view France in a positive light. Given the difference in tax treatment in France between treaty countries and non-treaty countries, the treaty should open up a wave of investment from Hong Kong into France.
"The main purpose of the treaty is to eliminate the possibilities of double taxation on income tax and wealth tax. It also acts to reduce the withholding tax that is applied in France on dividends from French companies to Hong Kong shareholders. As such the terms of the treaty are itself are helpful for anyone investing from Hong Kong into France and vice versa.”
The treaty between France and Hong Kong marks Hong Kong’s 14th taxation agreement, they already have taxation agreements in place with Austria, Belgium, Brunei, China, Hungary, Indonesia, Ireland, Kuwait, Liechtenstein, Luxembourg, the Netherlands, Thailand, United Kingdom and Vietnam.
The treaty is expected to formally come into effect in 2011 with France expected to adopt the treaty at the start of the next calendar year and Hong Kong expect to adopt it on or after April 1, 2011.
If you are moving overseas and would benefit from an insight into the taxation rules and policies in your host country then please see our international relocation guides. Each relocation guide contains comprehensive details of the taxation levels and laws in effect in the city and provides you with step-by-step guidelines for the taxation processes and payment schedules.
If you’re moving abroad and are unsure of the taxation obligations in your home country when moving overseas then you may also benefit from our free guide to meeting obligations at home.
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