French interest credit ends at 0%, dividend credit at 15% from 2027

Claimants with French-source interest or dividends face new maximum foreign-tax credit ceilings from 1 January 2027, when the new Finland-France tax treaty starts to applyVero. Vero's two credit tables now carry two France rows eachVero: one marked with the old treaty applying until 31 December 2026, and one with the new treaty applying from 1 January 2027.

For interest received from France, the table now has a 10 per cent row marked Sovelletaan 31.12.2026 asti (vanha verosopimus)Vero and a 0 per cent row marked Sovelletaan 1.1.2027 alkaen (uusi verosopimus)Vero. For dividends received from France, the table now has a 0 per cent row marked Sovelletaan 31.12.2026 asti (vanha verosopimus)Vero and a 15 per cent row marked Sovelletaan 1.1.2027 alkaen (uusi verosopimus)Vero. The income year therefore decides which row a claimant usesVero: 2026 income falls under the old-treaty rowsVero, 2027 income under the new-treaty rowsVero.

The new treaty's interest article provides that interest arising in one contracting state and beneficially owned by a resident of the other is taxable only in that other stateFinlex. Interest attributable to a permanent establishment in the source state is instead dealt with under the business-profits article, and any excess arising from a special relationship between payer and beneficial owner remains taxable under each state's domestic law with regard to the treaty's other provisions. Penalties for late payment are not interest under the article.

The new treaty's dividend article provides that dividends paid by a resident company remain taxable in the source state under its lawFinlex, but the tax so charged is nil where the beneficial owner is a company resident in the other state holding directly at least 5 per cent of the paying company's capital throughout a 365-day period including the payment day, disregarding holding changes resulting directly from a reorganisation such as a merger or demergerFinlex, and may not exceed 15 per cent of the gross dividends in all other casesFinlex. Dividends on a holding effectively connected with a permanent establishment in the source state fall under the business-profits article instead. The same structure applies generally: 15 per cent source tax on dividends, with 0 per cent preserved where the recipient company has held at least 5 per cent of the payer's capital continuously for at least 365 daysVero; detailed computation of the 365-day period is in the treaty text.

The method for eliminating double taxation also changes: exemption under the old treaty, credit under the new treaty, which can affect the taxation of items including dividend income. Under the credit method, tax levied by the source state is taken into account in the residence state's taxation and credited in accordance with the treaty.

The new treaty signed in 2023 entered into force on 28 August 2026Vero, applies from 1 January 2027, and replaces the earlier Finland-France treatyVero. Claimants relying on the 0 per cent dividend row should verify the 5 per cent and 365-day conditions, and the reorganisation disregard, against the treaty text itself before filingFinlex.

The dividend table also drops a housekeeping row for Sri Lanka that read 15 per cent applicable until 31 December 2018 under the old treaty. The row for the new Sri Lanka treaty, 10 per cent applicable from 1 January 2019, remains in the table.

Legal basis: the Finland-France tax treaty signed in 2023 (HE 14/2024; Valtioneuvoston asetus 34/26), Articles 10 and 11, as reflected in Vero's maximum-credit tables for interest and dividends.