Tax law

FOCUS ON THE TAX CONVENTION BETWEEN FRANCE AND THE EMIRATES – ITS IMPACTS FOR INDIVIDUALS RESIDENT IN THE UAE

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The tax treaty for the avoidance of double taxation between the French government and the government of the United Arab Emirates was signed on July 19, 1989 and was amended in 1993 to now also include a multilateral convention to prevent base erosion and profit shifting since the entry into force 1er January 2019 (the " Convention "). 

The objectives of this Convention are multiple. 

First, both countries wish to promote their economic relations and cooperation in tax matters. 

Furthermore, they wish to eliminate double taxation with respect to certain taxes expressly covered by the Convention[1].

However, the Convention has provided a safeguard: the scheme or strategies put in place by taxpayers, whether individuals or legal entities, must not have the sole and exclusive aim of obtaining tax relief provided for by the Convention.

The French and Emirati taxes covered by the Convention are limited to[2] :

– income tax including in the case of real estate sales;

– tax on companies registered in France or the UAE;

– the solidarity tax on real estate assets; and

– inheritance tax.

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CRYPTOCURRENCY AND TAXATION – A COMPARATIVE STUDY OF FRANCE, UNITED ARAB EMIRATES & CANADA

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Cryptocurrencies appeared in the digital world around ten years ago and are now experiencing significant growth and democratization. 

A virtual means of payment that can be used primarily on the Internet, using cryptography to secure transactions and the creation of units, and escaping any control by regulators and central banks, there are now more than 4,000 cryptocurrencies in circulation. 

However, their legal framework is sometimes confusing and difficult to understand. This article will therefore aim to study the legislative framework for cryptocurrencies in France, Canada, and the United Arab Emirates, as well as their tax regime. We will then examine, in a non-exhaustive manner, Initial Coin Offerings, a new fundraising phenomenon based on cryptocurrencies. 

What exactly are cryptos? 

A cryptocurrency is a virtual means of payment that relies on cryptography to secure transactions and the creation of units, and is outside the control of regulators and central banks. Cryptocurrencies are therefore based on a computer protocol for encrypted and decentralized transactions, called blockchain. 

The best known is bitcoin, which is a virtual unit of account stored electronically. However, there are now more than 4000 cryptocurrencies in circulation in the world, the best known outside of bitcoin being for example Ethereum, Ripple or even EOS, XRP, Tether, Cardan, Stellar, Chainlink, Uniswap, Polkado or even USD Coin.

Cryptocurrencies are part of the broader framework of crypoactives, which represent " virtual assets stored on an electronic medium allowing a community of users accepting them as payment to carry out transactions without having to resort to legal currency ". 


The issue and circulation of digital cryptoassets is notably linked to Initial Coin Offerings (“ICO”)Unlike an IPO, the ICO is financed on digital media known as tokens (tokens). The ICO thus represents a fundraising operation operating via the issuance of digital assets exchangeable for cryptocurrencies during the start-up phase of a start-up or business project. 

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FOCUS ON THE TAX CONVENTION BETWEEN FRANCE AND CANADA: ITS IMPACTS FOR COMPANIES

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The tax convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital between the French government and that of Canada was signed on May 2, 1975 and was amended in 1987, 1995 and 2010 (the " Convention "). 

The Convention provides specific provisions for companies and businesses established in Canada but which continue to have links with France. 

The taxes covered by the Tax Convention are: 

  • income tax including in the case of real estate sales;
  • tax on companies registered in France or Canada;
  • tax on gift tax (only for France).

We will return point by point to the different sources of income and their taxation.

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THE EXIT TAX OR WHEN FRENCH EXPATRIATES IN THE EMIRATES ARE IN THE SIGHTS OF THE FRENCH TAX AUTHORITIES

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Germany announced last February that it had purchased tax data of millions of people living in Dubai.

Questioned by The Echoes, the General Directorate of Public Finances has also confirmed that the sharing of this data with the French tax authorities has already taken place.

The French authorities are now seeking to identify potential fraudsters in this data and the presence of "undeclared income" and "unknown assets" of people wanting to evade tax in their country. This will include verifying whether French entrepreneurs who have gone to Dubai have paid the "exit tax" which applies to unrealized capital gains made in France and abroad (1).

This article will outline the concept of Exit Tax in order to inform French expatriates residing in Dubai about their compliance or not with French tax law due to their change of tax residence from France to the Emirates.

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IMPATRIFICATION OR WHEN A FRENCH CITIZEN RETURNS TO FRANCE

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Repatriation is a tax regime that was created for the benefit of French citizens who are tax residents abroad, also known as "expats," who wish to return to France permanently. 

This status aims to encourage French citizens to return to live in France after their expatriation. 

Thus, an expatriate person may not pay French tax upon returning to France by benefiting from an exemption on certain sources of French and foreign income. 

In this article, we will go over this repatriation regime point by point. 

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