France-Singapore DTAA:
Tax Treaty Guide with Examples
This guide explains the key features of the Singapore–France Double Taxation Avoidance Agreement (DTAA), which has been in effect since 1 January 2017. It is intended for individuals and businesses who are tax residents of either Singapore or France and are earning income across borders. Whether you're running a company with operations in both countries, an investor receiving dividends, or a freelancer providing cross-border services, this article provides a practical overview of how the treaty can apply to your situation.
We’ll cover key provisions of the treaty, including how business profits, dividends, capital gains, royalties, and other types of income are taxed and which country has the right to tax them under the agreement. Practical examples are included to illustrate how these rules apply in real-world scenarios. If you are considering setting up an entity in Singapore, we recommend reviewing our guide to opening a Singapore company to understand the full process and requirements.
This article covers the following topics of the Singapore-France DTAA:
- Purpose & Scope of the Agreement
- Key Terms
- Tax on Business Profits
- Tax on Dividends
- Tax on Interest Income
- Tax on Royalties
- Tax on Personal Services
- Tax on Director Fee
- Elimination of Double Taxation
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France-Singapore DTAA: Purpose & Scope
The main purpose of the Singapore–France Double Taxation Avoidance Agreement is to prevent the same income from being taxed in both countries while also discouraging fiscal evasion. The treaty clarifies which country has taxing rights over specific types of cross-border income and provides mechanisms to ensure fair and efficient tax treatment for individuals and businesses.
Who Is Covered
The DTAA applies to tax residents of either Singapore or France, or both. A “resident” is defined in the treaty and typically refers to any person (individual or legal entity) who is liable to tax under the laws of either country based on factors such as domicile, residence, place of management, or similar criteria. The agreement also includes provisions for resolving dual residency situations for both individuals and companies.
What Is Covered
The treaty covers a wide range of income arising in one or both countries. This includes business profits, dividends, interest, royalties, capital gains, income from employment, directorships, and pensions, independent and dependent personal services, and other miscellaneous income not specifically addressed in other articles.
The DTAA also includes mechanisms to provide relief from double taxation, either by exemption or tax credit, depending on the domestic tax rules and treaty provisions.
In addition, the agreement incorporates anti-abuse rules through the Multilateral Instrument (MLI), which prevents the misuse of treaty benefits through practices such as treaty shopping or aggressive tax structuring.
Understanding the DTAA requires a basic grasp of Singapore’s tax framework. For a deeper understanding, you may refer to our dedicated guides:
- Overview of the Singapore Tax System
- Singapore Corporate Tax Guide
- Singapore Personal Income Tax Guide
Understanding the terminology used in the Singapore–France DTAA is essential before diving into its detailed provisions. Below are the key terms explained in simple language.
France-Singapore DTAA: Key Terms Defined
To understand how the Singapore–France DTAA works, it's essential to grasp a few fundamental terms used throughout the agreement.
Person
Tax Resident
A “tax resident” refers to any person who, under the laws of Singapore or France, is liable to tax in that country due to domicile, residence, place of management, or other similar criteria (Article 4(1)).
- In case of dual residency for individuals, tie-breaker rules determine residence based on factors such as permanent home, centre of vital interests, and habitual abode (Article 4(2)).
- For entities, the place of effective management is generally used to determine residency (Article 4(3)).
Permanent Establishment (PE)
A “Permanent Establishment” (PE) means a fixed place of business through which the activities of an enterprise are wholly or partly carried on (Article 5(1)). This includes places such as offices, branches, factories, or construction sites lasting more than 12 months.
Additionally, furnishing of services (e.g., consultancy) can create a PE if activities continue for more than 365 days within any 15-month period (Article 5(3)). Certain preparatory or auxiliary activities, such as storage or information gathering, do not constitute a PE (Article 5(4)).
Withholding Tax
“Withholding tax” refers to tax deducted at source on cross-border payments like dividends, interest, or royalties before the amount is paid to a non-resident. Under this DTAA, the applicable withholding tax rates are capped, for example, at 5% or 15% for dividends (Article 10), and 10% for interest (Article 11).
To understand how withholding tax works in Singapore, including domestic rates and filing obligations, see our Singapore Withholding Tax guide.
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France–Singapore DTAA: Tax on Business Profits
How business profits are taxed under the treaty
Under Article 7 of the Singapore–France DTAA, business profits earned by a company or individual are taxable only in the country of residence, unless the profits are attributable to a PE in the other country. In such cases, the profits that are attributable to the PE may be taxed in the country where the PE is located.
To determine what portion of the profit is taxable in the source country, the treaty requires applying the arm’s length principle, treating the PE as if it were a separate and independent enterprise. Only the profits connected to the activities of the PE can be taxed by the host country. For more details on how this principle works in practice, refer to our Singapore Transfer Pricing guide.
Below are four examples showing how this applies in practice:
Example 1
Singapore company earning S$500,000 from France with no PE in France
- The Singapore company has no fixed place of business or dependent agent in France.
- Under Article 7(1), France is not allowed to tax the business profits.
- The full S$500,000 is taxable only in Singapore as the country of residence.
Example 2
Singapore company earning S$500,000 from France with a PE in France
- The Singapore company has a permanent establishment in France, such as a branch or project office.
- Let us assume that S$300,000 of the profits are attributable to that French PE.
- Under Article 7(1), France may tax the S$300,000 attributable to the PE.
- The remaining S$200,000 remains taxable in Singapore.
In this case, Singapore may grant relief to avoid double taxation, either through exemption or a foreign tax credit, depending on whether the exemption conditions are satisfied under Singapore law (see Article 23).
Example 3
French company earning S$500,000 from Singapore with no PE in Singapore
- The French company does not have a permanent establishment in Singapore.
- Under Article 7(1), Singapore may not tax the business profits.
- The entire S$500,000 is taxable only in France.
Example 4
French company earning S$500,000 from Singapore with a PE in Singapore
- The French company operates through a permanent establishment in Singapore.
- Suppose S$350,000 of the profits are attributable to the Singapore PE.
- Singapore is entitled to tax the S$350,000 under Article 7.
- The remaining S$150,000 stays taxable in France.
France should grant tax relief under its domestic law and Article 23 of the DTAA. This may be done either by exempting the PE profits or by allowing a credit for Singapore tax paid.
France–Singapore DTAA: Tax on Dividends
How dividends are taxed under the treaty
Article 10 of the Singapore–France DTAA governs the taxation of dividends paid between residents of the two countries. In general, dividends may be taxed in the country of residence of the recipient, but they may also be taxed in the source country (where the paying company is located), subject to treaty-imposed limits.
Treaty Withholding Tax Limits
If the beneficial owner of the dividends is a resident of the other contracting state:
- The withholding tax may not exceed 5 percent of the gross amount if the recipient is a company that holds at least 10 percent of the share capital of the company paying the dividends.
- In all other cases, the maximum rate is 15 percent of the gross amount of dividends.
Singapore does not impose withholding tax on dividends, as domestic dividends paid by Singapore-resident companies are exempt from tax in the hands of the recipient. However, France does apply withholding tax on outbound dividends, and this rate may be reduced under the DTAA.
If the dividend is effectively connected to a permanent establishment, the provisions of Article 7 (Business Profits) apply instead.
Example 1
Dividends of S$500,000 paid by a Singapore company to a French resident person
- Since Singapore does not levy withholding tax on dividends, no tax is withheld at source.
- The full S$500,000 is paid to the French recipient without deduction.
- The amount may be taxable in France, subject to local rules, with possible tax credit relief.
Example 2
Dividends of S$500,000 paid by a French company to a Singapore resident person
- France normally imposes withholding tax on outbound dividends.
- Under Article 10(2), the rate is 5 percent if the Singapore company holds at least 10 percent of the French company’s capital. Otherwise, the rate is 15 percent.
- Assuming the Singapore recipient is a company that owns less than 10 percent, France may withhold S$75,000 (15 percent).
- The net amount received is S$425,000.
- Singapore may grant a foreign tax credit of S$75,000 under Article 23(b), assuming the dividend does not qualify for exemption.
France–Singapore DTAA: Tax on Capital Gains
How capital gains are taxed under the treaty
The treatment of capital gains is covered under Article 13 of the Singapore–France DTAA. In general, capital gains are taxable only in the country of residence of the person disposing of the asset, except in specific cases where taxing rights are allocated to the source country.
Key Rules under the DTAA
- Gains from immovable property may be taxed in the country where the property is located (Article 13(1)).
- Gains from movable property forming part of a permanent establishment may be taxed in the country where the PE is located (Article 13(2)).
- Gains from the sale of shares in a company or entity whose value is derived primarily (more than 50 percent) from immovable property in one country may be taxed in that country (Article 13(3)).
- Other capital gains, such as gains from sale of shares not related to immovable property or PE, are taxable only in the country of residence (Article 13(4)).
Example 1
Sale of French shares by a Singapore resident, capital gain of S$500,000
- The shares do not derive more than 50 percent of their value from French immovable property.
- The Singapore resident has no permanent establishment in France.
- Under Article 13(4), the gain is taxable only in Singapore.
- France cannot tax the gain under the DTAA.
Example 2
Sale of Singapore shares by a French resident, capital gain of S$500,000
- The French resident does not have a PE in Singapore, and the shares do not derive their value from Singapore immovable property.
- Under Article 13(4), the gain is taxable only in France.
- Singapore does not tax the capital gain.
France–Singapore DTAA: Tax on Interest Income
How interest income is taxed under the treaty
Interest income is addressed under Article 11 of the Singapore–France DTAA. Generally, interest arising in one contracting state and paid to a resident of the other state may be taxed in the recipient’s country of residence, but the source country also retains limited taxing rights.
Treaty Withholding Tax Limits
If the beneficial owner of the interest is a resident of the other contracting state, the source country may tax the interest at a maximum rate of 10 percent of the gross amount (Article 11(2)).
Example 1
Interest of S$100,000 paid by a Singapore company to a French resident individual
- The French resident is the beneficial owner and has no PE in Singapore.
- Under Singapore domestic law, a 15 percent withholding tax applies to interest paid to non-residents.
- Under Article 11(2), the rate is reduced to 10 percent.
- The Singapore company must withhold S$10,000, and the French resident receives S$90,000.
- The recipient may claim relief in France under Article 23 through a foreign tax credit.
Example 2
Interest of S$100,000 paid by a French company to a Singapore resident company
- The Singapore company is the beneficial owner and does not have a PE in France.
- France typically imposes a domestic withholding tax on interest, but under Article 11(2), the rate is capped at 10 percent.
- Assuming France withholds S$10,000, the Singapore company receives S$90,000.
- Depending on Singapore’s domestic tax treatment, a foreign tax credit may be available if the income is taxable in Singapore.
France–Singapore DTAA: Tax on Royalties
How royalty income is taxed under the treaty
“Royalties” includes payments for the use of, or the right to use, intellectual property such as copyrights, patents, trademarks, designs, trade secrets, and technical know-how (Article 12(2)).
Royalties are covered under Article 12 of the Singapore–France DTAA. The treatment of royalty income differs from interest and dividends, as the right to tax typically lies with the country of residence of the recipient, not the source country.
Key Treaty Rules
- Under Article 12(1), royalties that arise in one country and are beneficially owned by a resident of the other country are taxable only in the country of residence.
- This means that, in most cases, no withholding tax should be applied by the source country if the treaty conditions are met.
- However, Article 12(3) provides a carve-out for certain types of royalties, such as those related to literary or artistic works and commercial experience. These may still be taxed in the source country under its domestic laws.
If the royalties are effectively connected with a permanent establishment, then Article 7 (Business Profits) applies instead.
Example 1
Royalty of S$100,000 paid by a Singapore company to a French resident company
- The French recipient is the beneficial owner and has no PE in Singapore.
- Under Article 12(1), the royalty is taxable only in France.
- Singapore does not apply withholding tax under the treaty.
- The full S$100,000 is paid out to the French company.
- The income is then taxed in France according to French tax laws.
Example 2
Royalty of S$100,000 paid by a French company to a Singapore resident company
- The Singapore company is the beneficial owner and does not have a PE in France.
- Under Article 12(1), the royalty is taxable only in Singapore.
- France must exempt the payment from withholding tax, provided the payment qualifies under the treaty rules.
- The full S$100,000 is paid to the Singapore company.
It is important to assess whether the royalty payment relates to the types of rights listed in Article 12(3), as these may trigger source-country taxation despite the general rule.
France–Singapore DTAA: Tax on Personal Services
How independent services are taxed under the treaty
Independent services, including professional and technical services, are governed by Article 14 of the Singapore–France DTAA. This covers income earned from activities performed in a self-employed capacity, such as those provided by consultants, lawyers, architects, accountants, engineers, and similar professionals.
Key Rule
Income derived by a resident of one country from professional services or other activities of an independent character is taxable only in the country of residence, unless:
- The individual has a fixed base regularly available in the other country; or
- They are present in the other country for more than 183 days within any twelve-month period.
If either condition is met, the other country may tax the income, but only the portion attributable to the fixed base or time spent there.
Example 1
Singapore resident earns S$100,000 from consulting services provided to a French company
- The Singapore resident does not have a fixed base in France and is physically present in France for less than 183 days.
- Under Article 14(1), the income is taxable only in Singapore.
- France cannot tax the consulting fee.
Example 2
French resident earns S$100,000 from technical services provided to a Singapore company
- The French resident provides services in Singapore for more than 183 days, or through a fixed base in Singapore.
- Under Article 14(1), Singapore may tax the portion of the income attributable to the time spent or fixed base in Singapore.
- The remaining income, if any, remains taxable in France.
- France should grant relief by exempting the Singapore-taxed portion or providing a foreign tax credit under Article 23.
The 183-day threshold and fixed base concept are central to determining tax liability on independent services under this treaty. If you’re unsure whether a fixed base is created in a given arrangement, it’s best to seek tax advisory support.
How employment income is taxed under the treaty
Dependent services, such as employment income, are covered under Article 14 of the Singapore–France DTAA. These are services performed by an individual under an employment contract rather than in a self-employed capacity.
Key Rule
Salaries, wages, and other remuneration earned by a resident of one country for employment exercised in the other country are generally taxable in the country where the work is physically performed.
However, income remains taxable only in the employee’s country of residence if all three of the following conditions are met (Article 14(2)):
- The individual is present in the other country for no more than 183 days in any twelve-month period.
- The remuneration is paid by or on behalf of an employer not resident in the country where the work is performed.
- The remuneration is not borne by a permanent establishment of the employer in the host country.
If any of the above conditions are not satisfied, the source country (where the services are rendered) may tax the income.
Example 1
French resident employed by a French company, working in Singapore for 4 months and earning S$100,000
- The employee is present in Singapore for less than 183 days.
- The employer is not a resident of Singapore.
- The remuneration is not borne by a Singapore PE.
- Singapore cannot tax the income.
- The income is taxable only in France under Article 14(2).
Example 2
Singapore resident employed by a Singapore company, assigned to work in France for 7 months and earning S$100,000
- The employee is present in France for more than 183 days.
- The employer is a Singapore company.
- Even if the income is not borne by a French PE, the 183-day threshold is exceeded.
- France may tax the income attributable to the time spent working there.
- Singapore may tax the full income as well, depending on residency and tax status.
- Relief from double taxation is available through exemption or foreign tax credit under Article 23.
France–Singapore DTAA: Tax on Director Fee
How director fee is taxed under the treaty
Director’s fees are specifically addressed in Article 15 of the Singapore–France DTAA. Unlike employment income, which is usually taxed in the country where the services are physically performed, director’s fees are taxed in the country where the company paying the fees is resident, regardless of where the director resides or performs their duties.
Key Rule
- Director’s fees and similar payments received by a resident of one country in their capacity as a board member of a company located in the other country may be taxed in the source country (i.e. where the company is resident).
This rule applies regardless of whether the director attends meetings remotely or physically from outside the source country.
Example 1
Director’s fee of S$100,000 paid by a Singapore company to a French resident director
- Under Article 15, Singapore, as the country where the paying company is resident, may tax the full S$100,000.
- France may also tax the income as part of the director’s worldwide earnings.
- To avoid double taxation, the French resident can claim a foreign tax credit in France for the tax paid in Singapore (see Article 23).
Example 2
Director’s fee of S$100,000 paid by a French company to a Singapore resident director
- France, as the country where the paying company is located, may tax the S$100,000 under Article 15.
- The Singapore resident may also be taxed in Singapore on their worldwide income, depending on their tax residency status.
Singapore may grant a foreign tax credit for French tax paid if the income is taxable in Singapore.
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