{"id":2113876,"date":"2026-08-30T13:06:40","date_gmt":"2026-08-30T11:06:40","guid":{"rendered":"https:\/\/kohenavocats.fr\/2026\/08\/30\/recover-french-withholding-tax-liquidation-surplus-foreign-shareholder\/"},"modified":"2026-08-30T13:06:40","modified_gmt":"2026-08-30T11:06:40","slug":"recover-french-withholding-tax-liquidation-surplus-foreign-shareholder","status":"publish","type":"post","link":"https:\/\/kohenavocats.fr\/en\/2026\/08\/30\/recover-french-withholding-tax-liquidation-surplus-foreign-shareholder\/","title":{"rendered":"How Can a Foreign Shareholder Recover French Withholding Tax on a Liquidation Surplus? Dissolution, Form 2777 and Treaty Evidence"},"content":{"rendered":"

A foreign shareholder can receive money when a French company is dissolved, liquidated and struck off, yet still discover that a substantial amount has been withheld before the transfer arrives in the foreign bank account. The key question is not whether the payment is called a capital reimbursement in the company\u2019s accounts. It is whether the final distribution contains a boni de liquidation<\/em>, the surplus remaining after the French company has paid its liabilities and returned the relevant capital, and whether France\u2019s domestic withholding exceeds the limit allowed by the tax treaty with the shareholder\u2019s country of residence. The process therefore combines company law, French income-tax rules and evidence of foreign tax residence. The French company generally has the operational duty to calculate, declare and pay the withholding, including through Form 2777-SD. The non-resident shareholder must then establish the legal basis for a reduced treaty rate or exemption, prove that the tax was actually withheld, and make a properly documented refund claim within the applicable time limit. This article sets out the sequence for an individual or foreign company shareholder, explains the roles of the liquidator, the greffe<\/em> and the French tax administration, and identifies the documents that should be assembled before the liquidation accounts are approved.<\/p>\n

I. How is a French liquidation surplus taxed when the shareholder lives abroad?<\/h2>\n

A. What is a liquidation surplus, and when is it legally available?<\/h3>\n

A liquidation surplus is not simply every amount transferred by a French company at the end of its life. The liquidator must first identify the legal route by which the company disappears, the assets that can still be realised, the liabilities that remain payable and the amount that can lawfully be distributed to shareholders. For a voluntary winding-up, the usual sequence is dissolution, liquidation, approval of the final liquidation accounts, distribution of any surplus and registration of the company\u2019s removal from the registers.<\/p>\n

The starting point is Article 1844-8 of the French Civil Code<\/a>. It states, in the official wording, La dissolution de la soci\u00e9t\u00e9 entra\u00eene sa liquidation<\/q> \u2014 dissolution brings about liquidation \u2014 subject to the statutory exceptions. The company remains a legal person for the needs of the liquidation until publication of the closure. This continuing legal personality matters to a foreign shareholder: the company is still the debtor of taxes, creditors and distribution obligations while the liquidator completes the file.<\/p>\n

For a commercial company, Article L237-2 of the French Commercial Code<\/a> uses similar language: La soci\u00e9t\u00e9 est en liquidation d\u00e8s l’instant de sa dissolution<\/q>. The company name must then be followed by the words \u201cin liquidation\u201d. The dissolution only becomes effective against third parties once it has been published in the Registre du commerce et des soci\u00e9t\u00e9s<\/em>, or RCS, the commercial and companies register. A foreign founder should therefore preserve both the shareholders\u2019 resolution and the publication evidence, rather than relying only on an extract from the company\u2019s accounting software.<\/p>\n

The company\u2019s official registration extract is commonly called a Kbis<\/em>. It is the registry extract showing the company\u2019s legal identity, registered office, management and current registration status. The greffe<\/em> is the registry office of the commercial court that receives and records the relevant corporate filings. Since the introduction of the national formalities portal, many filings are submitted through the Guichet unique<\/em> operated by the Institut national de la propri\u00e9t\u00e9 industrielle<\/em>, or INPI, but the registry and court consequences remain important. The INPI guidance on closing a company<\/a> describes the liquidation period as the stage in which the liquidator sells assets, collects receivables, pays debts, prepares final accounts and distributes the remaining capital or surplus before requesting removal.<\/p>\n

Publication is not an administrative detail that can be postponed until after the money has been paid. Article R237-2 of the Commercial Code<\/a> requires the act appointing the liquidator to be published dans le d\u00e9lai d’un mois<\/q>, within one month, in the authorised legal-announcement medium for the company\u2019s registered-office department. The act identifies the company, its capital, registered office, reason for liquidation, liquidator and the tribunal de commerce<\/a> registry where the liquidation documents are filed. Those records help establish the date of dissolution, the identity of the person authorised to approve the payment and the precise company from which the shareholder received the money.<\/p>\n

The liquidator must also protect creditors before calculating a distributable surplus. In Cour de cassation, Commercial Chamber, 18 June 1996, no. 94-18.530<\/a>, the Court held that la liquidation amiable<\/a> d’une soci\u00e9t\u00e9 impose l’apurement int\u00e9gral du passif<\/q>, meaning that an amicable liquidation requires the liabilities to be fully cleared. It added that disputed claims must be covered by a provision until the relevant proceedings have ended. A payment described as a liquidation surplus can therefore be challenged if a liquidator distributed assets while a material disputed debt had not been secured. A foreign shareholder should keep evidence that the company\u2019s liabilities, tax filings, employment obligations and social-contribution accounts were reviewed before the distribution resolution.<\/p>\n

The Bulletin officiel des annonces civiles et commerciales<\/em>, or BODACC, is the official bulletin for civil and commercial announcements. It should not be confused with an ordinary press article or a private database. Since 1 October 2024, a dissolution producing a transmission universelle du patrimoine<\/em>, or TUP \u2014 a universal transfer of assets and liabilities to a sole corporate shareholder \u2014 must be published in the BODACC. The official Service-Public explanation of the 2024 reform<\/a> also records the requirement, for an amicable liquidation, to file a social-regularity certificate and a tax certificate showing that the account is up to date at closure. These documents are relevant when testing whether the amount distributed really is a final surplus rather than a premature payment.<\/p>\n

In practical terms, the liquidator should prepare a bridge from the closing balance sheet to the shareholder\u2019s payment. It normally identifies cash and other assets realised, tax and social liabilities paid or reserved, professional fees, capital returned, and the remaining amount allocated to each shareholder. The allocation may follow the articles of association, a shareholders\u2019 agreement or the statutory profit-sharing proportions. If a shareholder is a foreign company, the file should additionally identify its legal name, registered office, tax residence and beneficial ownership position. If the shareholder is an individual, the file should show the acquisition history of the shares and the person\u2019s tax residence on the payment date.<\/p>\n

That distinction between return of capital and surplus is central. A pure repayment of a contribution is not the same economic event as a distribution of accumulated profits or reserves. However, a label such as \u201cshare capital refund\u201d does not decide the tax treatment. The French tax administration may examine the final liquidation accounts, the company\u2019s reserves, the shareholder\u2019s acquisition cost and the actual resolution approving the distribution. The amount above the relevant capital or acquisition basis is the part most likely to be treated as a boni de liquidation<\/em>, but the exact computation must be made from the company and shareholder records rather than from a generic percentage.<\/p>\n

B. Does France withhold tax from a foreign shareholder\u2019s liquidation surplus?<\/h3>\n

For French tax purposes, the answer is generally yes when the payment is a genuine liquidation surplus distributed by a French company to a shareholder whose tax residence or registered office is outside France. The administrative doctrine on non-resident distributions expressly lists a boni de liquidation<\/em> among the distributions that may be made after dissolution and treated as products of shares or equivalent investment income. See BOFiP, BOI-RPPM-RCM-30-30-10-10<\/a>, which describes the relevant distributions as including boni de liquidation<\/q>.<\/p>\n

The domestic charging rule is Article 119 bis of the French General Tax Code<\/a>, or CGI, the Code g\u00e9n\u00e9ral des imp\u00f4ts<\/em>. Its second paragraph covers products referred to in Articles 108 to 117 bis when the beneficial recipients do not have their tax domicile or registered office in France. The statutory wording refers to Les produits vis\u00e9s aux articles 108 \u00e0 117 bis<\/q> and applies a withholding rate set by Article 187. The classification is not defeated merely because the payment happens during the last phase of a company\u2019s existence. In Cour Administrative Court of Appeal of Nantes, 28 June 2010, no. 09NT00477<\/a>, a French company in liquidation had paid a surplus to a surviving shareholder resident in Switzerland. The court treated the surplus as a distributed income covered by the France\u2013Switzerland treaty\u2019s dividend article and upheld the corresponding withholding.<\/p>\n

The Nantes judgment is useful because it addresses the exact fact pattern rather than an ordinary annual dividend. The court reasoned that the amount paid to the shareholder, because it was not a repayment of contributions and represented a sum made available to shareholders, was a distributed income. It linked that classification to the treaty definition of dividends, which included income subject to the distributing state\u2019s distribution regime. The decision does not mean that every euro returned on a liquidation is taxable as a dividend. It means that the surplus component cannot be excluded merely because the company has entered liquidation.<\/p>\n

The applicable domestic rate depends on the beneficiary and the legal provisions in force when the payment is made. Article 187 of the CGI<\/a> currently provides, for the Article 119 bis withholding, a separate rule for corporate beneficiaries and states a 12.8% rate for individual beneficiaries. It also provides a 75% rate in the circumstances concerning payments to a non-cooperative state or territory, subject to the statutory exception. These rates are domestic starting points, not the final answer for a treaty-resident shareholder. A treaty may cap the French tax, reduce it to a lower percentage, or remove it, subject to the treaty\u2019s residence, beneficial-owner and anti-abuse conditions.<\/p>\n

The company that makes the payment has the primary operational responsibility. Article 1672 of the CGI<\/a> states that withholding under paragraph 2 of Article 119 bis is declared and paid to the Treasury by the person established in France that makes the payment. The French company, its liquidator or its paying intermediary must therefore coordinate the payment date, gross amount, rate, amount withheld, net amount remitted and declaration reference. The foreign shareholder should request a written statement showing every one of those figures. A bank credit showing only the net amount is usually insufficient evidence of the tax paid.<\/p>\n

Form 2777-SD is the central domestic reporting instrument. The current Form 2777-SD page on impots.gouv.fr<\/a> explains that the form is filed electronically with electronic payment and identifies the company\u2019s competent business tax service. The 2025 and 2026 versions include a section for withholding on income distributed to non-residents. Form 2777 is not a request by itself for the foreign shareholder\u2019s treaty refund; it is the company\u2019s declaration and payment record. The relevant 2777 filing, payment receipt and any correction should be obtained and retained in the refund file.<\/p>\n

Several statutory reliefs must be kept distinct. Article 119 ter of the CGI<\/a> can exempt certain dividends paid to a qualifying corporate parent in the European Union or European Economic Area, or EEA, where conditions include legal form, subject-to-tax status, direct holding and a continuous two-year holding period or a qualifying commitment. Its wording begins, La retenue \u00e0 la source pr\u00e9vue au 2 de l’article 119 bis n’est pas applicable aux dividendes distribu\u00e9s<\/q>. A foreign corporate shareholder must not assume that a liquidation surplus automatically satisfies those conditions; the treaty and the legal classification of the payment must be reviewed alongside the participation history.<\/p>\n

Article 119 quinquies of the CGI<\/a> is another narrow statutory relief for certain foreign legal persons that meet cumulative conditions, including a deficit and insolvency-related circumstances. It is not a general exemption for every non-resident shareholder. The practical question is whether the payment was correctly withheld at the domestic rate and, if so, whether the shareholder can claim a treaty reduction or refund. That approach avoids confusing a domestic exemption with a treaty claim.<\/p>\n

The 2026 rules also require attention to Article 119 bis A of the CGI<\/a>. For certain distributions and equivalent products paid to residents of a treaty state whose treaty provides no withholding or a full exemption, the payer applies the Article 187 rate at payment and the beneficiary can then seek reimbursement by proving that the treaty conditions are met. The provision expressly says that Le b\u00e9n\u00e9ficiaire des produits mentionn\u00e9s au 1 du pr\u00e9sent II peut obtenir le remboursement de la retenue \u00e0 la source<\/q>. The provision applies to payments made from 1 January 2026 in the situations described by the statute. A liquidation surplus can require this kind of after-payment process, particularly where the paying company cannot safely apply a treaty position before the final payment.<\/p>\n

The foreign shareholder\u2019s own status remains decisive. Tax residence means residence under the relevant treaty, not merely citizenship, incorporation or the address shown on a bank account. Beneficial ownership means that the shareholder has the right to use and enjoy the income and is not required by a legal or contractual arrangement to pass it to another person. For a parent company, the administration may ask for evidence of real activity, governance, financing, the shareholding chain and the commercial reason for owning the French company. The 2026 BOFiP guidance on treaty refunds explains that the applicant must establish residence, effective enjoyment of the income and the withholding actually borne. The existence of a foreign shareholder is therefore a starting fact, not a complete refund argument.<\/p>\n

One further distinction concerns a transaction that is not a real liquidation. In Conseil d\u2019\u00c9tat, 7 July 2010, no. 309009<\/a>, the Conseil d\u2019\u00c9tat held, in a case involving a transfer of business assets and a change of corporate activity, that the operation n’entra\u00eenait pas la dissolution avec liquidation de la soci\u00e9t\u00e9<\/q>. The case shows why the formal description of an operation matters. A transfer, restructuring, share sale, merger or TUP may produce a different tax and corporate sequence from a voluntary dissolution followed by an actual distribution of a surplus. The refund file should identify the correct operation and should not borrow the vocabulary of liquidation if the company was not actually liquidated.<\/p>\n

II. How can a foreign shareholder recover excess French withholding tax?<\/h2>\n

A. Which forms and treaty evidence are needed for a refund?<\/h3>\n

The refund question should be planned before the liquidation resolution is signed. There are two possible moments to obtain the treaty result. If the liquidator and paying institution have complete evidence before payment and the relevant procedure allows it, the company may apply the treaty rate directly. If the evidence is not ready, the company normally withholds at the domestic rate, pays the shareholder the net amount, and the shareholder or an agreed intermediary seeks the difference from the French tax administration. The second route is common in practice and is expressly described in the official doctrine on non-resident distributions.<\/p>\n

The general documentary package begins with the foreign tax-residence certificate. The official Form 5000-SD page<\/a> describes Form 5000 as the certificate used to establish the beneficiary\u2019s residence for treaty purposes. The beneficiary completes the identification and income sections, the foreign tax authority certifies the residence, and the French paying institution completes its part where the form requires it. Use the version and language accepted by the relevant treaty procedure, and make sure the certificate covers the payment date or the period required by the treaty. A certificate issued for a later year may not establish residence on the date of the liquidation distribution.<\/p>\n

For dividends and equivalent distributions, the form accompanying Form 5000 is generally Form 5001. The official Form 5001-SD page<\/a> calls it the form for the liquidation of withholding on dividends and provides several language versions, including English. Its table requires the French debtor, payment date, number of securities, gross distribution, domestic withholding, treaty withholding, tax actually withheld and the amount of relief requested. For a liquidation surplus, the French administration\u2019s classification and the relevant treaty should be checked before using a dividend form mechanically. Where the payment is treated as an income from shares or an equivalent distribution, Form 5001 is often the practical treaty schedule, but the accompanying letter should state that the payment is a liquidation surplus and explain the legal basis.<\/p>\n

The official guidance also distinguishes the simplified procedure from a later claim. If the residence certificate was not available at payment, the company may have to withhold under French domestic law. BOFiP, BOI-INT-DG-20-20-20-20<\/a>, explains that the treaty rate can then be obtained later by imputation or refund, and that the claim is connected with a later Form 2777 declaration. The practical file should therefore include the original 2777, the payment receipt, any later correcting 2777, the Form 5000 certified by the foreign authority, the Form 5001, and a schedule reconciling the gross surplus to the amount on which withholding was calculated.<\/p>\n

Evidence should be assembled in four layers.<\/p>\n