Tax Treaty Case Law around the Globe 2014

S. 41Chapter 5 France: Is There Symmetry between State of Taxation and State of Deduction of Expenses?

Alexandre Maitrot de la Motte

5.1. Introduction

Judged by the Conseil d'Etat on 1 October 2013, the BNP Paribas case raises an interesting question of application of the former Franco-British Tax Convention of 22 May 1968., Furthermore, even if that Treaty has since been replaced by the France-United Kingdom Convention of 19 June 2008, commentators nevertheless unanimously concur that the solution that has been given may still apply under the new convention.,

This case concerns the acquisition of a building in London by a company established in France. In order to finance this acquisition, the French company used products resulting from borrowing transactions and currency swaps realized by the French company contracting therefore with its UK branch. The main question was to determine whether these products had to be taxed in France or in the United Kingdom. Referring to articles 4, 5 and 6 of the former Franco-British Tax Convention of 22 May 1968, the Conseil d'Etat considered that these products had to be taxed in France. The reason is that these products cannot be regarded as "propert...