* The avoir fiscal is the French tax paid by the French company with
respect to its dividend. On a 100 French Franc ("FF") dividend, the avoir
fiscal would be 50 FF. Since RICs are entitled by treaty to refunds of all
French tax in excess of the 15 percent treaty rate, a RIC owing shares of a
French company paying a dividend of 100 FF per share would ultimately receive
85 FF on the distribution plus 85 percent of the related 50 FF avoir fiscal
(42.5 FF) for a total payment, including reclaim, of 127.5 FF.
May 31, 1994
TO: ACCOUNTING/TREASURERS COMMITTEE NO. 28-94
INTERNATIONAL COMMITTEE NO. 8-94
TAX COMMITTEE NO. 19-94
RE: JUNE 7 MEETING ON FRENCH TAX RECLAIM PROCEDURE
__________________________________________________________
As you may know, the Institute has been working with the
U.S. Treasury Department and French tax authorities to develop
procedures under which regulated investment companies ("RICs")
could certify eligibility for various tax benefits provided by
the U.S.-French income tax treaty. Under the Institute's
proposal (attached), a RIC would be able to certify, based upon
information available to it, that it satisfies each of the three
conditions for refund of the "avoir fiscal." *
Recently, we learned that consideration is being given to
more stringent procedures for establishing treaty eligibility,
such as requiring RICs to have their treaty eligibility verified
by independent auditors. Because of the importance of this issue
and the burdens that stringent procedures could impose on RICs
and their shareholders, a meeting to discuss French tax reclaims
will be held at the Institute, in the 12th Floor Conference Room,
on Tuesday, June 7 at 10:00 a.m. Given the important role that
your outside auditors and custodial bankers might play under more
stringent procedures, we would be pleased for you to invite them
to attend the meeting with you.
All persons planning to attend the meeting should contact
Theresa Brice at 202-326-5833 no later than Friday, June 3.
Lunch will be served following the meeting.
Keith D. Lawson
Associate Counsel - Tax
Attachment