France
Saudi Arabia
France's tax treaty with Saudi Arabia was signed in Paris on 18 February 1982. It is often described as very favourable. On dividends and interest, the text confirms it.
Three points are less well known. The treaty expires every five years unless renewed. It contains its own clause on Saudi subsidiaries controlled from France. And French law draws a line at 15% that some Saudi regimes fall under.
What Saudi Arabia asks of a French founder
The Saudi rules are the same for every nationality, and they are covered in the guides. Four of them shape the French side.
- Full foreign ownership is the default for services, consulting, software and industry. Trading at 100% needs SAR 30,000,000 of capital.
- The ministry registers companies, not private individuals. An individual qualifies with Premium Residency, or on the entrepreneur track with a Saudi university or incubator behind them.
- A resident general manager is expected in practice, even though the shareholder can stay in France.
- The company pays 20% income tax on the share of profit held by non-Saudi, non-GCC owners.
The detail is in 100% foreign ownership in Saudi Arabia. The second point matters most here: a French founder almost always invests through a French company, and that choice decides which French rule applies.
The 1982 treaty, read on the text
The convention entered into force on 1 March 1983 and was amended in 1991 and 2011. The 2011 protocol only added an exchange of information article, so the rates below date from the earlier texts.
| Payment from Saudi Arabia | Saudi domestic rate | Under the treaty | Article |
|---|---|---|---|
| Dividends | 5% | Taxable only in France | 6 |
| Interest and other debt income | 5% | Taxable only in France | 7 |
| Royalties | 15% | Taxable in France, see below | 8 |
| Technical and consulting fees | 5% | Business profits, no Saudi tax under 6 months of activity there | 14 |
| Gain on a holding of 25% or more | General rules | Taxable in Saudi Arabia | 9 |
- No holding threshold applies. The dividend article sets no minimum stake and no holding period.
- The exception is a local business. Saudi Arabia keeps its right to tax where the shares or the loan are tied to a business the French recipient itself carries on there.
- The exit is not protected. A French seller of a substantial holding, meaning 25% or more of the profits, can be taxed in Saudi Arabia on the gain.
- Relief is claimed, not automatic. The Saudi payer files with the tax authority, on a French tax residence certificate. The procedure is in Saudi Arabia withholding tax for non-residents.
For a French shareholder, the combined Saudi charge on distributed profit is therefore 20%, not the 24% that applies without a treaty.
Royalties are less clear than the tables suggest. Rate tables show 0% for France, and the wording is weaker than for dividends.
| Dividends and interest | Royalties | |
|---|---|---|
| Wording of paragraph 1 | "Taxable only" in the recipient's state | "Taxable" in the recipient's state |
| Reported Saudi position | Relief granted | 15% first claimed in one case, relief later agreed |
PwC reports that the Saudi tax authority once asked for 15% on a royalty paid to an unrelated party, then agreed to treaty relief. If a licence fee to France is part of your plan, have the Saudi payer confirm relief at source before the first payment.
A treaty that ends every five years
Article 20 gives the convention a five year life. It continues only when both governments exchange diplomatic notes.
- 18 Feb 1982Convention signed in Paris
- 1 Mar 1983Entry into force
- 1 Jul 19951991 protocol in force
- 1 Jun 20122011 protocol in force, exchange of information only
- 1 Jan 2024Latest renewal, published by Decree 2024-227
- 31 Dec 2028End of the current term unless renewed
It has been renewed each time since 1989, sometimes after the term had already started. A structure built on the 0% dividend rate should still be tested against the Saudi domestic 5%.
Article 209 B: is a Saudi subsidiary under a privileged tax regime
Article 209 B of the French tax code taxes a French company on the profits of a foreign entity it controls, when that entity enjoys a privileged tax regime. Article 238 A defines the regime, and the wording is precise.
- Control means more than 50% of shares, financial rights or voting rights, held directly or indirectly. The threshold drops to 5% where French or related companies together hold more than half.
- Privileged means lower by 40% or more. The foreign entity is not taxable, or bears tax at least 40% below what it would have paid in France.
- The French reference is 25%, the standard rate, plus additional contributions where they apply.
- The comparison is of tax actually borne, year by year, on the same profits recomputed under French rules.
The calculation is short. 25% less 40% is 15%, and "40% or more" means a charge of exactly 15% is caught. A company that also pays the 3.3% social contribution compares against 25.825%, which lifts the line to about 15.5%.
The headline comparison is a first reading. A Saudi company whose taxable base is much narrower than a French computation would produce can fall under the line while paying 20%.
The zone and headquarters regimes are set out in Saudi Arabia corporate tax.
What happens under the 15% line
Falling under the line opens the analysis. Two clauses then decide the outcome, one in French law and one in the treaty.
- 1Does a French company hold more than 50%?Directly or through a chain. If not, article 209 B does not apply on this basis
- 2Is the Saudi tax actually borne 15% or less of French computed profit?If it is higher, the regime is not privileged
- 3Does the treaty let France tax?Article 15 says yes for a company more than 50% French held, except income temporarily exempt under an investment incentive
- 4Does the safe harbour apply?Operations with a main purpose and effect other than locating profit there, presumed for a real industrial or commercial activity in the Kingdom
- 5If not: profits are deemed distributedTaxed in France in proportion to the holding, with credit for comparable Saudi tax
The safe harbour. Article 209 B does not apply when the French company shows that the entity's operations mainly have a purpose and effect other than placing profit in a low tax territory. The condition is deemed met by an effective industrial or commercial activity carried on in the entity's own state.
- A zone factory or logistics business selling from the Kingdom fits the presumption on its face.
- A regional headquarters is harder. By its own rules it may not carry on a revenue generating commercial activity, so the presumption is not available as written and the purpose has to be shown on the facts.
The treaty clause. Article 15 is unusual. It lets France tax the share of a Saudi company's income that corresponds to a French holding above 50%, "notwithstanding any other provision", with a credit for Saudi tax.
The same paragraph excludes income "temporarily exempt" in Saudi Arabia under rules designed to develop industrial and commercial investment. Whether a 30 year renewable exemption or a 5% rate counts as that is not addressed in any guidance we found. Treat it as an open point for your adviser, not as a shelter.
Bringing the profit home: the parent company regime
A French company that receives a Saudi dividend can apply the parent and subsidiary regime of articles 145 and 216. The dividend is exempt, less a 5% share of costs added back to taxable profit.
| Step | Amount |
|---|---|
| Taxable profit of the Saudi company | 100.00 |
| Saudi income tax at 20% | 20.00 |
| Dividend paid to the French parent | 80.00 |
| Saudi withholding under Article 6 of the treaty | 0.00 |
| French tax: 5% of 80.00, taxed at 25% | 1.00 |
| Total tax, both countries | 21.00 |
- The stake must be at least 5% of the capital, held in full or bare ownership.
- The shares must be kept for two years. Selling earlier means repaying the tax saved, with late interest.
- The 1% rate does not apply. That lower share of costs is reserved for tax groups and for qualifying companies in the European Union or the European Economic Area.
- Without the regime, the dividend joins taxable profit, and the treaty credit covers only Saudi tax levied on the dividend itself, which is nil.
Branch, subsidiary or direct holding: which French rule applies
The French treatment changes with the vehicle more than the Saudi one does.
| Saudi subsidiary of a French company | Saudi branch of a French company | Shares held by a French individual | |
|---|---|---|---|
| Saudi applicant | The French company | The French company | Premium Residency or entrepreneur track |
| Saudi tax on profit | 20% | 20% | 20% |
| Saudi tax on distribution | 0% under the treaty | 5% domestic rule on remitted profit, treaty relief to confirm | 0% under the treaty |
| French tax on Saudi profit | None until distribution, unless article 209 B applies | Exempt under Article 15 of the treaty | None until distribution, unless article 123 bis applies |
| French anti-abuse rule | Article 209 B | Not on the 2015 list for branches | Article 123 bis |
On the branch: the administration publishes a list of treaties that let France apply article 209 B to a foreign branch. The version dated 5 August 2015 includes the United Arab Emirates, Kuwait, Oman and Qatar. Saudi Arabia is not on it.
Article 123 bis, for the individual. It taxes the profits of a foreign entity as the individual's own investment income, each year, when three conditions are met together.
- A holding of 10% or more, direct or indirect, counting a spouse, ascendants and descendants.
- A privileged tax regime, measured as in article 238 A against French corporate tax.
- Assets that are mainly financial: securities, receivables, deposits or current accounts.
The third condition keeps an operating company out. A Saudi LLC with staff and contracts is not a pool of financial assets, and at 20% it is above the 15% line in any case.
Invoicing from France and sending people to the Kingdom
Many French founders keep the expertise in France and bill the Saudi company. The treaty treats those fees as business profits, with thresholds that were improved through its most favoured nation clause.
| Activity in Saudi Arabia | Taxable there only beyond | Source |
|---|---|---|
| Technical, consulting, engineering, legal or accounting services | 6 months in any 12 month period | Article 14, as amended through the Austria treaty |
| Construction, assembly or installation site | 12 continuous months | Article 14, through the Turkey treaty |
| Independent professional, in person | 183 days in a 12 month period | Article 10, through the Turkey treaty |
| Export of goods or services to the Kingdom | Not taxable there | Article 14, paragraph 4 |
The domestic rule points the other way: 5% is withheld on technical fees wherever the work is done, and 20% on management fees. For a French provider the treaty should remove both, on a file the Saudi payer submits.
The treaty also carries the principal purpose test of the multilateral instrument: a French company inserted only to collect these benefits can be refused them.
French documents: Kbis, accounts and the apostille
The Saudi ministry asks a foreign company for its commercial register extract and its financial statements for the last fiscal year, "certified by the Saudi Embassy". For a French company that means a Kbis and the latest annual accounts.
- Saudi Arabia has been a party to the Apostille Convention since 7 December 2022, with no objection recorded, and France since 1965.
- In France the notarial profession issues apostilles since 1 May 2025, through 15 regional centres.
- The Saudi tax authority accepts an apostille in writing for treaty files. The investment ministry's guide still names the embassy.
- A company formed this year has no accounts to show. Ask the ministry how it treats a new French holding before you create one for the purpose.
Confirm the route with the ministry before paying for either. The reasoning is in how to register a company in Saudi Arabia.
The bottom line
For a French company that owns an ordinary Saudi subsidiary, the result is simple and good: 20% in Saudi Arabia, no withholding on the dividend, about one more point in France. Article 209 B stays out of the picture at that rate.
The analysis only becomes delicate when the Saudi rate drops. A zone company or a regional headquarters is under the French line, and what follows depends on a safe harbour and on a treaty exception that has not been interpreted publicly.
So decide the Saudi regime and the French holding structure together, before the investment registration records the activity.
If you want the Saudi side set up with the French parent's documents in order, start with the Saudi Arabia company formation service.
Frequently asked questions
Is there a tax treaty between France and Saudi Arabia?
Yes. The convention was signed on 18 February 1982, entered into force on 1 March 1983, and was amended in 1991 and 2011. It runs in five year terms. The current one started on 1 January 2024 and ends on 31 December 2028 unless renewed.
What is the Saudi withholding tax on dividends paid to France?
Under Article 6 of the treaty, a dividend paid by a Saudi company to a French resident is taxable only in France, so the Saudi 5% does not apply. The Saudi payer has to claim the relief with the tax authority.
Does article 209 B apply to a Saudi subsidiary taxed at 20%?
Not on the headline rate. A regime is privileged when tax is lower by 40% or more than in France, which puts the line at 15% for a company at the standard 25% rate. The test is applied to tax actually borne, so a narrow Saudi tax base can change the answer.
What about a Saudi regional headquarters or a special economic zone company?
Both are under the 15% line, at 0% and 5% on qualifying income. Article 209 B then depends on the safe harbour for real local activity, and on a treaty exception for temporarily exempt income whose scope is not settled in public guidance.
How is a Saudi dividend taxed in a French parent company?
With a stake of at least 5% kept for two years, the dividend is exempt except for a 5% share of costs. On 80 of dividend that adds 4 to taxable profit, or 1 of tax at 25%.
Can a French individual own a Saudi company directly?
The Saudi ministry registers companies and individuals who hold Premium Residency, with a separate entrepreneur track. In France, article 123 bis applies to a 10% holding in a low taxed entity whose assets are mainly financial, which an operating company is not.
Do French company documents need legalisation by the Saudi embassy?
Saudi Arabia has accepted apostilles since 7 December 2022, and French apostilles are issued by notarial centres since 1 May 2025. The investment ministry's guide still says "certified by the Saudi Embassy", so confirm the route before choosing.
Sources
- France and Saudi Arabia tax convention of 18 February 1982, consolidated text published by the French tax administration: exclusive residence state taxation of dividends (Article 6) and debt income (Article 7), the royalty wording (Article 8), and the clause on Saudi companies more than 50% French held (Article 15)
- BOFiP, BOI-INT-CVB-SAU, version of 10 July 2024: entry into force on 1 March 1983, renewal for five years from 1 January 2024 by Decree 2024-227, and the six month services threshold obtained through the most favoured nation clause
- BOFiP, BOI-IS-BASE-60-10-20-20, version of 10 June 2026: a privileged tax regime means tax lower by 40% or more, measured on tax actually borne and against French corporate tax including additional contributions
- Service-Public.fr, checked 1 September 2025: French apostilles are issued by the notarial profession since 1 May 2025, through 15 regional centres
- HCCH status table for the Apostille Convention: accession by Saudi Arabia on 8 April 2022, in force on 7 December 2022, with no objection recorded
Official and read on 5 October 2026: the consolidated French text of the 1982 convention, its 2011 protocol and the version combined with the multilateral instrument, all published on impots.gouv.fr; the administrative commentary in BOFiP (BOI-INT-CVB-SAU, BOI-IS-BASE-60-10-10, BOI-IS-BASE-60-10-20-20 and the list BOI-ANNX-000157 dated 5 August 2015); Service-Public.fr on the apostille; the HCCH status table. Articles 209 B, 238 A, 123 bis, 145, 216, 219 and 235 ter ZC of the French tax code were read in a consolidated edition dated 28 September 2026 built from Legifrance data, not on Legifrance itself. The French text of the convention governs alongside the Arabic one, and the translations on this page are ours. The 15% and 15.5% figures are arithmetic from the 25% rate and the 40% test, not statutory thresholds. Saudi figures (20% income tax, 5% and 0% regimes, domestic withholding rates, who may register) are those of the other guides in this series. Secondary: the account of the Saudi tax authority's position on royalties comes from PwC. To reconfirm before acting: whether the treaty exception for temporarily exempt income covers a regional headquarters or a zone company, on which no guidance was found; how the Saudi tax authority processes relief for a French recipient; whether the investment ministry accepts an apostille; and the French taxation of a dividend received by an individual, which is not covered here. No French or Saudi tax adviser has reviewed this page. This is not legal or tax advice.