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France: Update on multilateral instrument (MLI) ratification

France: Update on multilateral instrument ratification

The French Parliament on 5 July 2018 passed a bill authorizing ratification of the OECD's multilateral instrument (MLI)—the agreement that allows jurisdictions to transpose into their existing bilateral income tax treaties, measures to prevent base erosion and profit shifting (BEPS).


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One measure in the French version of the MLI legislation concerns efforts by France to prevent companies from circumventing the definition of a “permanent establishment” in “contract splitting” situations. In this regard, the French government added a reservation to Article 14 of the MLI concerning the “splitting up” of contracts. The rational was based on legal uncertainty concerning application of this concept abroad and to allow for its subsequent cancellation.

The MLI provisions will need to be read in light of the affected income tax treaties to which France is a signatory country.

What’s next?

The next step in France’s process for ratification of the MLI would be promulgation of the legislation by the president, to be followed by notification to the OECD. France’s ratification of the MLI would bring the number or jurisdictions that thus far have deposited their instruments of ratification with the OECD General Secretariat to 10 countries. 

For France, the MLI would be expected to enter into force on 1 November 2018 and to be effective beginning 2019.  


For more information, contact a tax professional with Fidal* in France:

Cédric Philibert |+33 1 55681558 |

Nathalie Cordier-Deltour|+33 1 55681454 | 

* Fidal is a French law firm that is independent from KPMG and its member firms.

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