Tax Treaty Case Law around the Globe 2023

1. Introduction

The question of the resident status of a company benefiting from a privileged tax regime has again arisen before the Supreme Administrative Court of France (Conseil d’Etat). It had already given several decisions on these issues but has ruled for the first time on a case relating to a company that benefits from a partial exemption. The OBEA case confirms previous case law and provides valuable insights into the notion of resident and how it is understood by the French judge.

2. Facts of the case

OBEA (Observatoire d’Economie Appliquée) is a French limited liability company. It benefited from services provided by a Tunisian company based in Tunis during the years of 2013 and 2014. Payments made to it were subject to a withholding tax provided for in Article 182 B of the French General Tax Code. The withholding tax was paid voluntarily by the company to the French tax authorities.

According to the French company, the payments were not taxable because the Tunisian company had no permanent establishment in France in application of Article 11 regarding business profits of the double tax treaty in force between France and Tunisia. On the contrary, the French tax administratio...