The purpose of this document is to facilitate the understanding of the application of the MLI to the Convention and it does not constitute a source of law. The authentic legal text of this tax treaty and supplementary instrument PROTOCOL remain the legal texts applicable.

SYNTHESISED TEXT OF THE MLI AND THE CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE FRENCH REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF FISCAL EVASION AND PROTOCOL

If you follow the information in this document, and it turns out to be incorrect, or it is misleading and you make a mistake as a result, the ATO will take that into account when determining what action, if any, we should take.

General disclaimer on this synthesised text document

This document presents the synthesised text for the application of the Convention between the Government of Australia and the Government of the French Republic for the Avoidance of Double Taxation with respect to Taxes on Income and the Prevention of Fiscal Evasion and Protocol signed on 20 June 2006 (the “Convention”), as modified by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI”) signed by Australia and the French Republic on 7 June 2017.

This document was prepared by the Australian Taxation Office and represents its understanding of the modifications made to the Convention by the MLI.

The document was prepared on the basis of the MLI positions of Australia and of the French Republic each of which was submitted to the Depositary upon ratification on 26 September 2018. These MLI positions are subject to modifications as provided in the MLI. Modifications made to MLI positions could modify the effects of the MLI on the Convention.

The sole purpose of this document is to facilitate the understanding of the application of the MLI to the Convention and it does not constitute a source of law. The authentic legal texts of the Convention and the MLI take precedence and remain the legal texts applicable.

The provisions of the MLI that are applicable with respect to the provisions of the Convention are included in boxes throughout the text of this document in the context of the relevant provisions of the Convention. The boxes containing the provisions of the MLI have generally been inserted in accordance with the ordering of the provisions of the 2017 OECD Model Tax Convention.

Changes to the text of the provisions of the MLI have been made to conform the terminology used in the MLI to the terminology used in the Convention (such as “Covered Tax Agreement” and “Convention”, “Contracting Jurisdictions” and “Contracting States”), to ease the comprehension of the provisions of the MLI. The changes in terminology are intended to increase the readability of the document and are not intended to change the substance of the provisions of the MLI. Similarly, changes have been made to parts of provisions of the MLI that describe existing provisions of the Convention: descriptive language has been replaced by legal references of the existing provisions to ease the readability.

In all cases, references made to the provisions of the Convention or to the Convention must be understood as referring to the Convention as modified by the provisions of the MLI, provided such provisions of the MLI have taken effect.

The English language translation in this document of the French Republic’s reservations under Article 28(2)(a) of the MLI is a NAATI Accredited translation of the authentic French text.

References

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting [2019] ATS 1 (provides the authentic legal text of the MLI).

Convention between the Government of Australia and the Government of the French Republic for the Avoidance of Double Taxation with Respect to Taxes on Income and the Prevention of Fiscal Evasion and Protocol [2009] ATS 13 (provides, in the case of Australia, the authentic legal text of the Convention).

Signatories and parties to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (provides the MLI positions of Australia and of the French Republic submitted to the Depositary upon ratification on 26 September 2018).

Entry Into Effect of the MLI Provisions

The provisions of the MLI applicable to the Convention do not take effect on the same dates as the original provisions of the Convention. Each of the provisions of the MLI could take effect on different dates, depending on the types of taxes involved (taxes withheld at source or other taxes levied) and on the choices made by Australia and the French Republic in their MLI positions.

Dates of the deposit of instruments of ratification, acceptance or approval:

26 September 2018 for both Australia and the French Republic.

Entry into force of the MLI:

1 January 2019 for both Australia and the French Republic.

In accordance with paragraph 1 of Article 35 of the MLI, the provisions of the MLI (other than Article 16 Mutual Agreement Procedure and Part VI Arbitration) have effect with respect to this Agreement:

a)     with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2019; and

b)     with respect to all other taxes levied by each Contracting State, for taxes levied with respect to taxable periods beginning on or after 1 July 2019.

In accordance with paragraph 4 of Article 35 of the MLI, Article 16 of the MLI (Mutual Agreement Procedure) has effect with respect to this Convention for a case presented to the competent authority of a Contracting State on or after 1 January 2019, except for cases that were not eligible to be presented as of that date under the Convention prior to its modification by the MLI, without regard to the taxable period to which the case relates.

In accordance with paragraphs 1 and 2 of Article 36 of the MLI, the provisions of Part VI (Arbitration) of the MLI shall have effect with respect to this Convention:

a)     with respect to cases presented to the competent authority of a Contracting State (as described in subparagraph a) of paragraph 1 of Article 19 (Mandatory Binding Arbitration) on or after 1 January 2019, and

b)     with respect to cases presented to the competent authority of a Contracting State prior to 1 January 2019,

i.     only to the extent that the competent authorities of both Contracting States agree that it will apply to that specific case, and

ii.     on the date when both Contracting States have notified the Depositary that they have reached mutual agreement pursuant to paragraph 10 of Article 19 of the MLI, along with information regarding the date or dates on which such cases shall be considered to have been presented to the competent authority of a Contracting State (as described in subparagraph a) of paragraph 1 of Article 19 of the MLI) according to the terms of that mutual agreement.

CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE FRENCH REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF FISCAL EVASION

THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE FRENCH REPUBLIC,

The following paragraph 3 of Article 6 of the MLI is included in the preamble of this Convention:

ARTICLE 6 OF THE MLI – PURPOSE OF A COVERED TAX AGREEMENT

Desiring to further develop their economic relationship and to enhance their co-operation in tax matters,

[REPLACED by paragraph 1 of Article 6 of the MLI] Desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income and the prevention of fiscal evasion,

The following paragraph 1 of Article 6 of the MLI replaces the text referring to an intent to eliminate double taxation in the preamble of this Convention:

ARTICLE 6 OF THE MLI – PURPOSE OF A COVERED TAX AGREEMENT

Intending to eliminate double taxation with respect to the taxes covered by [the Convention] without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in [the Convention] for the indirect benefit of residents of third jurisdictions),

HAVE AGREED as follows:

Article 1

PERSONS COVERED

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2

TAXES COVERED

1.     The existing taxes to which this Convention shall apply are:

a)     in the case of Australia:

the income tax, and the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, imposed under the federal law of Australia;

b)     in the case of France:

(i)     the income tax (“l’impôt sur le revenu”);

(ii)     the corporation tax (“l’impôt sur les sociétés”);

(iii)     the additional taxes on corporations (“les contributions sur l’impôt sur les sociétés”); and

(iv)     widespread social security contributions (“contributions sociales généralisées”) and contributions for the reimbursment of the social debt (“contributions pour le remboursement de la dette sociale”), including any withholding tax with respect to the aforesaid taxes.

2.     This Convention shall also apply to any identical or substantially similar taxes which are subsequently imposed by a Contracting State in addition to, or in place of the existing taxes to which this Convention applies. The competent authorities of the Contracting States shall notify each other of significant changes which have been made in their law relating to taxes to which this Convention applies.

3.     Notwithstanding paragraphs 1 and 2, the taxes to which Articles 25 and 26 shall apply are:

a)     in the case of Australia, taxes of every kind and description imposed under the federal taxes laws administered by the Commissioner of Taxation; and

b)     in the case of France, taxes of every kind and description imposed on behalf of France or its political subdivisions or local authorities

Article 3

DEFINITIONS

1.     For the purposes of this Convention, unless the context otherwise requires:

a)     the term “Australia”, when used in a geographical sense, excludes all external territories other than:

(i)     the Territory of Norfolk Island;

(ii)     the Territory of Christmas Island;

(iii)     the Territory of Cocos (Keeling) Islands;

(iv)     the Territory of Ashmore and Cartier Islands;

(v)     the Territory of Heard Island and McDonald Islands; and

(vi)     the Coral Sea Islands Territory,

and includes any area adjacent to the territorial limits of Australia (including the Territories specified in this subparagraph) in respect of which there is for the time being in force, consistently with international law, a law of Australia dealing with the exploration for or exploitation of any of the natural resources of the seabed and subsoil of the continental shelf;

b)     the term “France” means the European and Overseas Departments of the French Republic including the territorial sea, and any area outside the territorial sea within which, in accordance with international law, the French Republic has sovereign rights for the purpose of exploring and exploiting the natural resources of the seabed and its subsoil and the superjacent waters;

c)     the terms “Contracting State”, “a Contracting State” and “the other Contracting State” mean Australia or France, as the context requires;

d)     the term “person” includes an individual, a company and any other body of persons;

e)     the term “company” means any body corporate or any entity which is treated as a company or body corporate for tax purposes;

f)     the term “enterprise” applies to the carrying on of any business;

g)     the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

h)     the term “Australian tax” means tax imposed by Australia, being tax to which this Convention applies by virtue of paragraphs 1 and 2 of Article 2;

i)     the term “French tax” means tax imposed by France, being tax to which this Convention applies by virtue of paragraphs 1 and 2 of Article 2;

j)     the term “competent authority” means in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner and in the case of France, the minister in charge of the budget or an authorised representative of the minister;

k)     the term “business” includes the performance of professional services and of other activities of an independent character;

l)     the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely from a place or between places in the other Contracting State.

2.     In this Convention, the terms “Australian tax” and “French tax” do not include any penalty or interest imposed under the law of either Contracting State relating to the taxes referred to in Article 2.

3.     As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State concerning the taxes to which the Convention applies, any meaning under the applicable tax law of that State prevailing over a meaning given to the term under other law of that State.

Article 4

RESIDENCE

1.     For the purposes of this Convention, the term “resident of a Contracting State” means:

a)     in the case of Australia, a person who is a resident of Australia for the purposes of Australian tax; and

b)     in the case of France, a person who is domiciled in France for the purposes of French tax.

A Contracting State or a political subdivision or statutory body or a local authority thereof is also a resident of that State for the purposes of this Convention.

2.     A person is not a resident of a Contracting State for the purposes of this Convention if the person is liable to tax in that State in respect only of income from sources in that State.

3.     Where by reason of the preceding provisions of this Article a person, being an individual, is a resident of both Contracting States, the person’s status shall be determined as follows:

a)     the individual shall be deemed to be a resident only of the State in which a permanent home is available to that individual; but if a permanent home is available in both States, or in neither of them, that individual shall be deemed to be a resident only of the State with which the individual’s personal and economic relations are closer (centre of vital interests);

b)     if the State in which the centre of vital interests is situated cannot be determined, the individual shall be deemed to be a resident only of the State of which that individual is a national or citizen.

4.     Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, it shall be deemed to be a resident solely of the Contracting State in which its place of effective management is situated.

5.     The term “resident of a Contracting State” shall include, where that State is France, any partnership or group of persons which has its place of effective management in France and all partners, shareholders or other members of which are personally liable to tax therein in respect of their part of the profits of those partnerships or groups of persons pursuant to French domestic laws.

Article 5

PERMANENT ESTABLISHMENT

1.     For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of the enterprise is wholly or partly carried on.

2.     The term “permanent establishment” shall include especially:

a)     a place of management;

b)     a branch;

c)     an office;

d)     a factory;

e)     a workshop;

f)     a mine, quarry or other place of extraction of natural resources; and

g)     an agricultural, pastoral or forestry property.

3.     [Paragraph 4 of Article 13 of the MLI applies] An enterprise shall not be deemed to have a permanent establishment merely by reason of:

a)     the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

b)     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

c)     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

d)     the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

e)     the maintenance of a fixed place of business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising or scientific research.

The following paragraph 4 of Article 13 of the MLI applies to paragraph 3 of Article 5 of this Convention:

ARTICLE 13 OF THE MLI – ARTIFICIAL AVOIDANCE OF PERMANENT ESTABLISHMENT STATUS THROUGH THE SPECIFIC ACTIVITY EXEMPTIONS

[Paragraph 3 of Article 5 of the Convention] shall not apply to a fixed place of business that is used or maintained by an enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in the same [Contracting State] and:

a)     that place or other place constitutes a permanent establishment for the enterprise or the closely related enterprise under the provisions of [Article 5 of the Convention]; or

b)     the overall activity resulting from the combination of the activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, is not of a preparatory or auxiliary character,

provided that the business activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, constitute complementary functions that are part of a cohesive business operation.

4.     An enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if:

a)     it has a building site or construction, installation or assembly project in that State which exists for more than twelve months; or

b)     it carries on supervisory activities in that State for more than six months in connection with a building site, or a construction, installation or assembly project which is being undertaken in that State; or

c)     it maintains substantial equipment for rental or other purposes within that State (excluding equipment let under a hire-purchase agreement) for more than six months.

5.     

a)     The duration of activities under subparagraphs a) and b) of paragraph 4 will be determined by aggregating the periods during which activities are carried on in a Contracting State by associated enterprises provided that the activities of the enterprise in that State are connected with the activities carried on in that State by its associate.

b)     The period during which two or more associated enterprises are carrying on concurrent activities will be counted only once for the purpose of determining the duration of activities.

c)     For the purposes of this Article, an enterprise shall be deemed to be associated with another enterprise if:

(i)     one is controlled directly or indirectly by the other ; or

(ii)     both are controlled directly or indirectly by the same person or persons.

6.     A person acting in a Contracting State on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph 7 applies - shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if:

a)     the person has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless the person’s activities are limited to the purchase of goods or merchandise for the enterprise; or

b)     in so acting the person manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise.

7.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where that person is acting in the ordinary course of the person’s business as such a broker or agent.

8.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself make either company a permanent establishment of the other.

9.     The principles set forth in the preceding paragraphs of this Article shall be applied in determining for the purposes of paragraph 7 of Article 11 and paragraph 5 of Article 12 whether there is a permanent establishment outside both Contracting States, and whether an enterprise, not being an enterprise of a Contracting State, has a permanent establishment in a Contracting State.

The following paragraph 1 of Article 15 of the MLI applies to provisions of this Convention:

ARTICLE 15 OF THE MLI – DEFINITION OF A PERSON CLOSELY RELATED TO AN ENTERPRISE

For the purposes of the provisions of [Article 5 of the Convention], a person is closely related to an enterprise if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same persons or enterprises. In any case, a person shall be considered to be closely related to an enterprise if one possesses directly or indirectly more than 50 per cent of the beneficial interest in the other (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company’s shares or of the beneficial equity interest in the company) or if another person possesses directly or indirectly more than 50 per cent of the beneficial interest (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company’s shares or of the beneficial equity interest in the company) in the person and the enterprise.

Article 6

INCOME FROM REAL PROPERTY

1.     Income from real property, including income from an agricultural, pastoral or forestry property, may be taxed in the Contracting State in which that property is situated.

2.     For the purposes of this Article, the term “real property”:

a)     in the case of Australia, has the meaning which it has under the law of Australia, and shall also include:

(i)     a lease of land and any other interest in or over land, whether improved or not including a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and

(ii)     a right to receive variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore for or exploit, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources; and

b)     in the case of France, means such property which, according to the law of France, is immovable property and shall in any case include:

(i)     property accessory to immovable property;

(ii)     livestock and equipment used in agriculture and forestry;

(iii)     rights to which the provisions of the general law respecting landed property apply; and

(iv)     usufruct of immovable property and rights to variable or fixed payments as consideration for the working of or the right to work mineral deposits, mineral sources and other natural resources.

Ships and aircraft shall not be regarded as real property.

3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of real property.

4.     Notwithstanding the provisions of Article 7, where shares or other rights in a company, trust or comparable institution entitle a person to the enjoyment of real property of that company, trust or comparable institution, income derived from the direct use, letting or use in any other form of that right of enjoyment may be taxed in the Contracting State in which the real property is situated.

5.     The provisions of paragraphs 1, 3 and 7 shall also apply to income from real property of an enterprise.

6.     The provisions of paragraph 4 shall also apply to income of an enterprise derived from the direct use, letting or use in any other form of a right of enjoyment referred to in that paragraph.

7.     Any interest or right referred to in paragraph 2 or 4 shall be regarded as situated where the buildings, land, mineral, oil or gas deposits, quarries, mineral sources or natural resources, as the case may be, are situated or where the exploration may take place.

Article 7

BUSINESS PROFITS

1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2.     Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3.     In the determination of the profits of a permanent establishment there shall be allowed as deductions expenses of the enterprise, including executive and general administrative expenses, which are deductible according to the law of the State in which the permanent establishment is situated whether incurred in that State or elsewhere.

4.     If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to the permanent establishment of an enterprise, the competent authority may apply to that enterprise for that purpose the provisions of the taxation law of that State, provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article.

5.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6.     Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

7.     Notwithstanding the preceding provisions of this Article, profits of an enterprise of a Contracting State from carrying on a business of any form of insurance other than life insurance may be taxed in the other Contracting State in accordance with the law of that other State relating specifically to the taxation of any person who carries on such a business, provided that if the law in force in either Contracting State at the date of signature of this Convention relating to the taxation of such a person is varied (otherwise than in minor respects so as not to affect its general character), the Contracting States shall consult with each other with a view to agreeing to such amendment of this paragraph as may be necessary.

8.     Where:

a)     a resident of a Contracting State is beneficially entitled, whether directly or through one or more interposed trust estates, to a share of the business profits of an enterprise carried on in the other Contracting State by the trustee of a trust estate other than a trust estate which is treated as a company for tax purposes; and

b)     in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in that other State,

the enterprise carried on by the trustee shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated in that other State and that share of business profits shall be attributed to that permanent establishment.

Article 8

SHIPS AND AIRCRAFT

1.     Profits of an enterprise of a Contracting State derived from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2.     Notwithstanding the provisions of paragraph 1, profits of an enterprise of a Contracting State derived from the operation of ships or aircraft may be taxed in the other Contracting State to the extent that they are profits derived directly or indirectly from ship or aircraft operations confined solely to places in that other State.

3.     The amount which shall be charged to tax in a Contracting State under paragraph 2 in respect of transport operations of ships shall not exceed 5 per cent of the amount paid or payable (net of rebates) in respect of carriage.

4.     The provisions of paragraph 3 shall not apply to profits from the operation of ships, where the profits are attributable to a permanent establishment of the enterprise situated in the other Contracting State.

5.     The profits to which the provisions of paragraphs 1 and 2 apply include profits from the operation of ships or aircraft derived through participation in a pool service or other profit sharing arrangement.

6.     For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise which are shipped in a Contracting State and are discharged at a place in that State (without having been discharged outside that State) shall be treated as profits from ship or aircraft operations confined solely to places in that State.

Article 9

ASSOCIATED ENTERPRISES

1.     Where:

a)     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

b)     the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions exist between the two enterprises in their commercial or financial relations which differ from those which may be expected between independent enterprises dealing wholly independently with one another, then any profits which might, but for those conditions, be expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2.     If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to an enterprise, the competent authority may apply to that enterprise for that purpose the provisions of the taxation law of that State, provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article.

3.     [MODIFIED by paragraph 1 of Article 17 of the MLI] Where, according to the provisions of paragraphs 1 and 2, profits are included by a Contracting State in the profits of an enterprise, the other Contracting State shall, on a claim being made by the other enterprise concerned, consistently with its law consider the inclusion so made and the provision of relief to that other enterprise in relation to the taxation of profits which the other State determines to be profits which, but for the particular conditions referred to in paragraphs 1 and 2, might have been expected to accrue to the first-mentioned enterprise.

The following paragraph 1 of Article 17 of the MLI applies and supersedes the provisions of this Convention:

ARTICLE 17 OF THE MLI – CORRESPONDING ADJUSTMENTS

Where a [Contracting State] includes in the profits of an enterprise of that [Contracting State] – and taxes accordingly – profits on which an enterprise of the other [Contracting State] has been charged to tax in that other [Contracting State] and the profits so included are profits which would have accrued to the enterprise of the first-mentioned [Contracting State] if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other [Contracting State] shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of [the Convention] and the competent authorities of the [Contracting States] shall if necessary consult each other.

Article 10

DIVIDENDS

1.     Dividends paid by a company which is a resident of a Contracting State for the purposes of its tax, being dividends beneficially owned by a resident of the other Contracting State may be taxed in that other State.

2.     However, those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed:

a)     [MODIFIED by paragraph 1 of Article 8 of the MLI] 0 per cent where those dividends are paid out of profits that have borne the normal rate of company tax and those dividends are paid to a company which, in the case of Australia, holds directly at least 10 per cent of the voting power of the company paying the dividends, or in the case of France, holds directly at least 10 per cent of the capital of the company paying the dividends; and

b)     [MODIFIED by paragraph 1 of Article 8 of the MLI] 5 per cent of the gross amount of other dividends, if the beneficial owner of those dividends is a company which, in the case of Australia, holds directly at least 10 per cent of the voting power of the company paying the dividends, or in the case of France, holds directly at least 10 per cent of the capital of the company paying the dividends; and

The following paragraph 1 of Article 8 of the MLI applies to subparagraphs a) and b) of paragraph 2 of Article 10 of this Convention:

ARTICLE 8 OF THE MLI – DIVIDEND TRANSFER TRANSACTIONS

[Subparagraphs a) and b) of paragraph 2 of Article 10 of the Convention] shall apply only if the ownership conditions described in those provisions are met throughout a 365 day period that includes the day of the payment of the dividends (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividends).

c)     15 per cent of the gross amount of the dividends in all other cases,

provided that if the relevant law in either Contracting State at the date of signature of this Convention is varied otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

3.     The term “dividends” as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as other amounts which are subjected to the same taxation treatment as a distribution or dividend by the law of the State of which the company making the distribution is a resident for the purposes of its tax.

4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other State, and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment. In such case, the provisions of Article 7 shall apply.

5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company–being dividends beneficially owned by a person who is not a resident of the other Contracting State–except insofar as the holding in respect of which such dividends are paid is effectively connected with a permanent establishment situated in that other State, even if the dividends paid consist wholly or partly of profits or income arising in such other State. This paragraph shall not apply in relation to dividends paid by any company which is a resident of Australia for the purposes of Australian tax and which is also a resident of France for the purposes of French tax.

Article 11

INTEREST

1.     Interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed in that other State.

2.     However, that interest may also be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3.     Notwithstanding paragraph 2, interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may not be taxed in the first-mentioned State if:

a)     the interest is derived from the investment of official reserve assets by the government of a Contracting State or a political subdivision or local authority thereof, its monetary institutions or a bank performing central banking functions in that State; or

b)     the interest is derived by a financial institution which is unrelated to and dealing wholly independently with the payer. For the purposes of this Article, the term “financial institution” means a bank or other enterprise substantially deriving its profits by raising debt finance in the financial markets or by taking deposits at interest and using those funds in carrying on a business of providing finance.

4.     Notwithstanding paragraph 3, interest referred to in subparagraph b) of that paragraph may be taxed in the State in which it arises at a rate not exceeding 10 per cent of the gross amount of the interest if the interest is paid as part of an arrangement involving back-to-back loans or other arrangement that is economically equivalent and intended to have a similar effect to back-to-back loans.

5.     The term “interest” in this Article includes interest from government securities or from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, interest from any other form of indebtedness, as well as income which is subjected to the same taxation treatment as income from money lent by the law of the Contracting State in which the income arises. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

6.     The provisions of paragraphs 1 and 2, subparagraph b) of paragraph 3 and paragraph 4 of this Article shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated in that other State, and the indebtedness in respect of which the interest is paid is effectively connected with that permanent establishment. In such case the provisions of Article 7 shall apply.

7.     Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

8.     Where, by reason of a special relationship between the payer and the beneficial owner of the interest, or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might reasonably have been expected to have been agreed upon by the payer and the beneficial owner in the absence of that relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12

ROYALTIES

1.     Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed in that other State.

2.     However, those royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.

3.     The term “royalties” in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:

a)     the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right; or

b)     the supply of scientific, technical, industrial or commercial knowledge or information; or

c)     the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph a) or any such knowledge or information as is mentioned in subparagraph b); or

d)     the use of, or the right to use:

(i)     motion picture films; or

(ii)     films or audio or video tapes or disks, or any other means of image or sound reproduction or transmission for use in connection with television, radio or other broadcasting; or

e)     total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.

4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties arise, through a permanent establishment situated in that other State, and the right or property in respect of which the royalties are paid or credited is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

5.     Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether the person is a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

6.     Where, by reason of a special relationship between the payer and the beneficial owner of the royalties, or between both of them and some other person, the amount of the royalties paid or credited, having regard to what they are paid or credited for, exceeds the amount which might reasonably have been expected to have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the amount of the payments or credits shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.

Article 13

ALIENATION OF PROPERTY

1.     Income, profits or gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State.

2.     Income, profits or gains from the alienation of property, other than real property, that forms part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including income, profits or gains from the alienation of that permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

3.     Income, profits or gains of an enterprise of a Contracting State from the alienation of ships or aircraft operated by that enterprise in international traffic, or of property (other than real property) pertaining to the operation of those ships or aircraft, shall be taxable only in that State.

4.     [MODIFIED by subparagraph a) of paragraph 1 of Article 9 of the MLI] Income, profits or gains derived by a resident of a Contracting State from the alienation of any shares or other interests in a company, or of an interest of any kind in a partnership, trust or other entity, where the value of the assets of such entity, whether they are held directly or indirectly (including through one or more interposed entities, such as, for example, through a chain of companies), is principally attributable to real property situated in the other Contracting State, may be taxed in that other State.

The following subparagraph a) of paragraph 1 of Article 9 of the MLI applies to paragraph 4 of Article 13 of this Convention:

ARTICLE 9 OF THE MLI – CAPITAL GAINS FROM ALIENATION OF SHARES OR INTERESTS OF ENTITIES DERIVING THEIR VALUE PRINCIPALLY FROM IMMOVABLE PROPERTY

[Paragraph 4 of Article 13 of the Convention] shall apply if the relevant value threshold is met at any time during the 365 days preceding the alienation.

5.     Where an individual who upon ceasing to be a resident of a Contracting State, is treated under the taxation law of that State as having alienated any property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxation in the other Contracting State as if the individual had, immediately before ceasing to be a resident of the first-mentioned State, alienated and reacquired the property for an amount equal to its fair market value at that time.

6.     Gains of a capital nature from the alienation of any property, other than that referred to in the preceding paragraphs shall be taxable only in the Contracting State of which the alienator is a resident.

7.     In this Article, the term “real property” has the same meaning as it has in Article 6.

8.     The situation of real property shall be determined for the purposes of this Article in accordance with paragraph 7 of Article 6.

Article 14

INCOME FROM EMPLOYMENT

1.     Subject to the provisions of Articles 15, 17, and 18, remuneration derived by an individual who is a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State.

2.     Notwithstanding the provisions of paragraph 1, remuneration derived by an individual who is a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

a)     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year of that other State; and

b)     the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and

c)     the remuneration is not borne by a permanent establishment which the employer has in that other State.

3.     Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of a Contracting State may be taxed in that State.

Article 15

DIRECTORS’ FEES

Directors’ fees and similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 16

ENTERTAINERS AND SPORTSPERSONS

1.     Notwithstanding the provisions of Articles 7 and 14, income derived by entertainers (such as theatre, motion picture, radio or television artists and musicians) and sports persons from their personal activities as such may be taxed in the Contracting State in which these activities are exercised.

2.     Where income in respect of personal activities exercised by an entertainer or sports person in that person’s capacity as such accrues not to that person but to another person, whether a resident of a Contracting State or not, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sports person are exercised.

Article 17

PENSIONS AND ANNUITIES

1.     Subject to the provisions of paragraph 2 of Article 18, pensions and annuities paid to a resident of a Contracting State shall be taxable only in that State.

2.     The term “annuity” means any stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

3.     Notwithstanding anything in this Convention, any pension or allowance that is paid by a Contracting State in respect of wounds, disabilities or death caused by war, or in respect of war service, and is exempt from tax under the law of that State, to a resident of the other Contracting State shall be exempt from tax in that other State.

4.     

a)     Contributions borne by an individual who is a resident of a Contracting State, and who renders services in the course of an employment in that State, to a pension scheme established and recognised for tax purposes in the other Contracting State shall, in determining the individual’s tax payable, be treated in the first-mentioned State in the same way and subject to the same conditions and limitations as contributions made to a pension scheme that is recognised for tax purposes in that State, provided that:

(i)     the individual was not a resident of that State, and was participating in the pension scheme, immediately before beginning to exercise employment in that State; and

(ii)     the pension scheme is accepted by the competent authority of that State as generally corresponding to a pension scheme recognised as such for tax purposes by that State.

b)     For the purposes of subparagraph a):

(i)     the term “a pension scheme” means an arrangement in which the individual participates in order to secure retirement benefits payable in respect of the services referred to in subparagraph a); and

(ii)     a pension scheme is “recognised for tax purposes” in a State if the contributions to the scheme would qualify for tax relief in that State.

Article 18

GOVERNMENT SERVICE

1.     

a)     Salaries, wages and other similar remuneration (other than a pension or annuity) paid by a Contracting State or a political subdivision or statutory body or local authority thereof to an individual in respect of services rendered to that State, subdivision, body or authority shall be taxable only in that State.

b)          However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of, and a national or citizen of, that State and is not also a national or citizen of the first-mentioned State.

2.     

a)     Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or statutory body or local authority thereof to an individual in respect of services rendered to that State, subdivision, body or authority shall be taxable only in that State.

b)     However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national or citizen of, that State and is not also a national or citizen of the first-mentioned State.

3.     The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages and other similar remuneration, or to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or statutory body or local authority thereof.

Article 19

STUDENTS

Payments which a student who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is temporarily present in the first-mentioned State solely for the purpose of the student’s education receives from sources outside that first-mentioned State for the purpose of the student’s maintenance or education shall not be taxed in that first-mentioned State.

Article 20

OTHER INCOME

1.     Items of income of a resident of a Contracting State wherever arising which are not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

2.     The provisions of paragraph 1 shall not apply to income, other than income from real property as defined in paragraph 2 of Article 6, derived by a resident of a Contracting State who carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention from sources in the other Contracting State may also be taxed in the other Contracting State.

Article 21

SOURCE OF INCOME

1.     Income, profits or gains derived by a resident of a Contracting State which, under Articles 6 to 8, 10 to 16 and 18 may be taxed in the other Contracting State, shall be deemed to be income from sources in that other State.

2.     Profits included in the profits of an enterprise of a Contracting State under paragraph 1 of Article 9 shall for purposes of the taxation of that enterprise be deemed to be income of that enterprise derived from sources in that Contracting State.

3.     Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8, 10 to 16 and 18, may be taxed in the other Contracting State shall for the purposes of Article 23 and of the law of the first-mentioned Contracting State relating to its tax be deemed to arise from sources in the other Contracting State.

Article 22

RULES OF TAXATION

Where conditions of commercial or financial relations between a person who is a resident of Australia and a person who is a resident of France differ from those which may be expected between independent persons dealing wholly independently with one another, nothing in the Convention shall prevent a Contracting State, by application of its domestic law, from including in the profits of such persons and taxing accordingly the profits which, but for those conditions, might have been expected to have accrued to them.

Article 23

ELIMINATION OF DOUBLE TAXATION

1.     Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle of this Article), French tax paid under the law of France and in accordance with this Convention, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in France shall be allowed as a credit against Australian tax payable in respect of that income.

2.     In the case of France, double taxation shall be avoided in the following manner:

a)     Notwithstanding any other provision of this Convention, income which may be taxed or shall be taxable only in Australia in accordance with the provisions of this Convention shall be taken into account for the computation of the French tax where the beneficiary of such income is a resident of France and where such income is not exempted from corporation tax according to French domestic law. In that case, the Australian tax shall not be deductible from such income but the resident of France shall, subject to the conditions and limits provided for in subparagraph (i) and (ii), be entitled to a tax credit against French tax. Such tax credit shall be equal:

(i)     in the case of income other than mentioned in subparagraph (ii), to the amount of French tax attributable to such income provided that the resident of France is subject to Australian tax in respect of such income;

(ii)     in the case of income referred to in Article 7 and paragraph 2 of Article 13 which is subject to the corporation tax, and in the case of income referred to in Article 10, Article 11, Article 12, paragraph 1 of Article 13 and paragraph 3 of Article 14, Article 15, Article 16 and Article 20, to the amount of tax paid in Australia in accordance with the provisions of those Articles. However, such tax credit shall not exceed the amount of French tax attributable to such income.

b)     The term “amount of French tax attributable to such income” as used in subparagraph a) means:

(i)     where the tax of such income is computed by applying a proportional rate, the amount of the net income concerned multiplied by the rate which actually applies to that income;

(ii)     where the tax on such income is computed by applying a progressive scale, the amount of the net income concerned multiplied by the rate resulting from the ratio of the tax actually payable on the total net income taxable in accordance with French law to the amount of that total net income.

Article 24

MUTUAL AGREEMENT PROCEDURE

1.     [The first sentence of paragraph 1 of Article 24 of this Convention is REPLACED by the first sentence of paragraph 1 of Article 16 of the MLI] Where a person considers that the actions of one or both of the Contracting States result or will result for the person in taxation not in accordance with this Convention, the person may, irrespective of the remedies provided by the domestic law of those States concerning taxes to which this Convention applies, present a case to the competent authority of the Contracting State of which the person is a resident. The case must be presented within 3 years from the first notification of the action resulting in taxation not in accordance with this Convention.

The following first sentence of paragraph 1 of Article 16 of the MLI replaces the first sentence of paragraph 1 of Article 24 of this Convention:

ARTICLE 16 OF THE MLI – MUTUAL AGREEMENT PROCEDURE

Where a person considers that the actions of one or both of the [Contracting States] result or will result for that person in taxation not in accordance with the provisions of [the Convention], that person may, irrespective of the remedies provided by the domestic law of those [Contracting States], present the case to the competent authority of either [Contracting State].

2.     The competent authority shall endeavour, if the claim appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Convention. The solution so reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. In particular, they may consult together to endeavour to agree to the same allocation of income between associated enterprises mentioned in Article 9. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

5.     For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 3 of this Article or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.

The following Part VI of the MLI applies to this Convention:

PART VI OF THE MLI - ARBITRATION

Article 19 (Mandatory Binding Arbitration) of the MLI

1.     Where:

a)     under [paragraph 1 of Article 24 of the Convention], a person has presented a case to the competent authority of a [Contracting State] on the basis that the actions of one or both of the [Contracting States] have resulted for that person in taxation not in accordance with the provisions of [the Convention]; and

b)     the competent authorities are unable to reach an agreement to resolve that case pursuant to [paragraph 2 of Article 24 of the Convention], within a period of [three years] beginning on the start date referred to in paragraph 8 or 9 [of Article 19 of the MLI], as the case may be (unless, prior to the expiration of that period the competent authorities of the [Contracting States] have agreed to a different time period with respect to that case and have notified the person who presented the case of such agreement),

any unresolved issues arising from the case shall, if the person so requests in writing, be submitted to arbitration in the manner described in this Part, according to any rules or procedures agreed upon by the competent authorities of the [Contracting States] pursuant to the provisions [of paragraph 10 of Article 19 of the MLI].

2.     Where a competent authority has suspended the mutual agreement procedure referred to in paragraph 1 [of Article 19 of the MLI] because a case with respect to one or more of the same issues is pending before court or administrative tribunal, the period provided in subparagraph b) of paragraph 1 [of Article 19 of the MLI] will stop running until either a final decision has been rendered by the court or administrative tribunal or the case has been suspended or withdrawn. In addition, where a person who presented a case and a competent authority have agreed to suspend the mutual agreement procedure, the period provided in subparagraph b) of paragraph 1 [of Article 19 of the MLI] will stop running until the suspension has been lifted.

3.     Where both competent authorities agree that a person directly affected by the case has failed to provide in a timely manner any additional material information requested by either competent authority after the start of the period provided in subparagraph b) of paragraph 1 [of Article 19 of the MLI], the period provided in subparagraph b) of paragraph 1 [of Article 19 of the MLI] shall be extended for an amount of time equal to the period beginning on the date by which the information was requested and ending on the date on which that information was provided.

4.     

a)     The arbitration decision with respect to the issues submitted to arbitration shall be implemented through the mutual agreement concerning the case referred to in paragraph 1 [of Article 19 of the MLI]. The arbitration decision shall be final.

b)     The arbitration decision shall be binding on both [Contracting States] except in the following cases:

(i)     if a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision. In such a case, the case shall not be eligible for any further consideration by the competent authorities. The mutual agreement that implements the arbitration decision on the case shall be considered not to be accepted by a person directly affected by the case if any person directly affected by the case does not, within 60 days after the date on which notification of the mutual agreement is sent to the person, withdraw all issues resolved in the mutual agreement implementing the arbitration decision from consideration by any court or administrative tribunal or otherwise terminate any pending court or administrative proceedings with respect to such issues in a manner consistent with that mutual agreement.

(ii)     if a final decision of the courts of one of the [Contracting States] holds that the arbitration decision is invalid. In such a case, the request for arbitration under paragraph 1 [of Article 19 of the MLI] shall be considered not to have been made, and the arbitration process shall be considered not to have taken place (except for the purposes of Articles 21 (Confidentiality of Arbitration Proceedings) and 25 (Costs of Arbitration Proceedings) [of the MLI]). In such a case, a new request for arbitration may be made unless the competent authorities agree that such a new request should not be permitted.

(iii)     if a person directly affected by the case pursues litigation on the issues which were resolved in the mutual agreement implementing the arbitration decision in any court or administrative tribunal.

5.     The competent authority that received the initial request for a mutual agreement procedure as described in subparagraph a) of paragraph 1 [of Article 19 of the MLI] shall, within two calendar months of receiving the request:

a)     send a notification to the person who presented the case that it has received the request; and

b)     send a notification of that request, along with a copy of the request, to the competent authority of the other [Contracting State].

6.     Within three calendar months after a competent authority receives the request for a mutual agreement procedure (or a copy thereof from the competent authority of the other [Contracting State]) it shall either:

a)     notify the person who has presented the case and the other competent authority that it has received the information necessary to undertake substantive consideration of the case; or

b)     request additional information from that person for that purpose.

7.     Where pursuant to subparagraph b) of paragraph 6 [of Article 19 of the MLI], one or both of the competent authorities have requested from the person who presented the case additional information necessary to undertake substantive consideration of the case, the competent authority that requested the additional information shall, within three calendar months of receiving the additional information from that person, notify that person and the other competent authority either:

a)     that it has received the requested information; or

b)     that some of the requested information is still missing.

8.     Where neither competent authority has requested additional information pursuant to subparagraph b) of paragraph 6 [of Article 19 of the MLI], the start date referred to in paragraph 1 [of Article 19 of the MLI] shall be the earlier of:

a)     the date on which both competent authorities have notified the person who presented the case pursuant to subparagraph a) of paragraph 6 [of Article 19 of the MLI]; and

b)     the date that is three calendar months after the notification to the competent authority of the other [Contracting State] pursuant to subparagraph b) of paragraph 5 [of Article 19 of the MLI].

9.     Where additional information has been requested pursuant to subparagraph b) of paragraph 6 [of Article 19 of the MLI], the start date referred to in paragraph 1 [of Article 19 of the MLI] shall be the earlier of:

a)     the latest date on which the competent authorities that requested additional information have notified the person who presented the case and the other competent authority pursuant to subparagraph a) of paragraph 7 [of Article 19 of the MLI]; and

b)     the date that is three calendar months after both competent authorities have received all information requested by either competent authority from the person who presented the case.

If, however, one or both of the competent authorities send the notification referred to in subparagraph b) of paragraph 7 [of Article 19 of the MLI], such notification shall be treated as a request for additional information under subparagraph b) of paragraph 6 [of Article 19 of the MLI].

10.     The competent authorities of the [Contracting State] shall by mutual agreement pursuant to [Article 24 of the Convention] settle the mode of application of the provisions contained in this Part, including the minimum information necessary for each competent authority to undertake substantive consideration of the case. Such an agreement shall be concluded before the date on which unresolved issues in a case are first eligible to be submitted to arbitration and may be modified from time to time thereafter.

11.     Omitted.

12.     

a)     any unresolved issue arising from a mutual agreement procedure case otherwise within the scope of the arbitration process provided for by [the MLI] shall not be submitted to arbitration, if a decision on this issue has already been rendered by a court or administrative tribunal of either [Contracting State];

b)     if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the [Contracting States], a decision concerning the issue is rendered by a court or administrative tribunal of one of the [Contracting States], the arbitration process shall terminate.

Article 20 (Appointment of Arbitrators) of the MLI

1.     Except to the extent that the competent authorities of the [Contracting States] mutually agree on different rules, paragraphs 2 through 4 [of Article 20 of the MLI] shall apply for the purposes of this Part.

2.     The following rules shall govern the appointment of the members of an arbitration panel:

a)     The arbitration panel shall consist of three individual members with expertise or experience in international tax matters.

b)     Each competent authority shall appoint one panel member within 60 days of the date of the request for arbitration under paragraph 1 of Article 19 [of the MLI]. The two panel members so appointed shall, within 60 days of the latter of their appointments, appoint a third member who shall serve as Chair of the arbitration panel. The Chair shall not be a national or resident of either [Contracting State].

c)     Each member appointed to the arbitration panel must be impartial and independent of the competent authorities, tax administrations, and ministries of finance of the [Contracting States] and of all persons directly affected by the case (as well as their advisors) at the time of accepting an appointment, maintain his or her impartiality and independence throughout the proceedings, and avoid any conduct for a reasonable period of time thereafter which may damage the appearance of impartiality and independence of the arbitrators with respect to the proceedings.

3.     In the event that the competent authority of a [Contracting State] fails to appoint a member of the arbitration panel in the manner and within the time periods specified in paragraph 2 [of Article 20 of the MLI] or agreed to by the competent authorities of the [Contracting States], a member shall be appointed on behalf of that competent authority by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development that is not a national of either [Contracting State].

4.     If the two initial members of the arbitration panel fail to appoint the Chair in the manner and within the time periods specified in paragraph 2 [of Article 20 of the MLI] or agreed to by the competent authorities of the [Contracting States], the Chair shall be appointed by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development that is not a national of either [Contracting State].

Article 21 (Confidentiality of Arbitration Proceedings) of the MLI

1.     Solely for the purposes of the application of the provisions of this Part and of the provisions of [the Convention] and of the domestic laws of the [Contracting States] related to the exchange of information, confidentiality, and administrative assistance, members of the arbitration panel and a maximum of three staff per member (and prospective arbitrators solely to the extent necessary to verify their ability to fulfil the requirements of arbitrators) shall be considered to be persons or authorities to whom information may be disclosed. Information received by the arbitration panel or prospective arbitrators and information that the competent authorities receive from the arbitration panel shall be considered information that is exchanged under the provisions of [the Convention] related to the exchange of information and administrative assistance.

2.     The competent authorities of the [Contracting States] shall ensure that members of the arbitration panel and their staff agree in writing, prior to their acting in an arbitration proceeding, to treat any information relating to the arbitration proceeding consistently with the confidentiality and nondisclosure obligations described in the provisions of [the Convention] related to exchange of information and administrative assistance and under the applicable laws of the [Contracting States].

Article 22 (Resolution of a Case Prior to the Conclusion of the Arbitration) of the MLI

For the purposes of this Part and the provisions of [the Convention] that provide for resolution of cases through mutual agreement, the mutual agreement procedure, as well as the arbitration proceeding, with respect to a case shall terminate if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the [Contracting States]:

a)     the competent authorities of the [Contracting States] reach a mutual agreement to resolve the case; or

b)     the person who presented the case withdraws the request for arbitration or the request for a mutual agreement procedure.

Article 23 (Type of Arbitration Process) of the MLI

Final offer arbitration

1.     Except to the extent that the competent authorities of the [Contracting States] mutually agree on different rules, the following rules shall apply with respect to an arbitration proceeding pursuant to this Part:

a)     After a case is submitted to arbitration, the competent authority of each [Contracting State] shall submit to the arbitration panel, by a date set by agreement, a proposed resolution which addresses all unresolved issue(s) in the case (taking into account all agreements previously reached in that case between the competent authorities of the [Contracting States]). The proposed resolution shall be limited to a disposition of specific monetary amounts (for example, of income or expense) or, where specified, the maximum rate of tax charged pursuant to [the Convention], for each adjustment or similar issue in the case. In a case in which the competent authorities of the [Contracting States] have been unable to reach agreement on an issue regarding the conditions for application of a provision of [the Convention] (hereinafter referred to as a “threshold question”), such as whether an individual is a resident or whether a permanent establishment exists, the competent authorities may submit alternative proposed resolutions with respect to issues the determination of which is contingent on resolution of such threshold questions.

b)     The competent authority of each [Contracting State] may also submit a supporting position paper for consideration by the arbitration panel. Each competent authority that submits a proposed resolution or supporting position paper shall provide a copy to the other competent authority by the date on which the proposed resolution and supporting position paper were due. Each competent authority may also submit to the arbitration panel, by a date set by agreement, a reply submission with respect to the proposed resolution and supporting position paper submitted by the other competent authority. A copy of any reply submission shall be provided to the other competent authority by the date on which the reply submission was due.

c)     The arbitration panel shall select as its decision one of the proposed resolutions for the case submitted by the competent authorities with respect to each issue and any threshold questions, and shall not include a rationale or any other explanation of the decision. The arbitration decision will be adopted by a simple majority of the panel members. The arbitration panel shall deliver its decision in writing to the competent authorities of the [Contracting States]. The arbitration decision shall have no precedential value.

2.     Omitted.

3.     Omitted.

4.     Omitted.

5.     Prior to the beginning of arbitration proceedings, the competent authorities of the [Contracting States] to [the Convention] shall ensure that each person that presented the case and their advisors agree in writing not to disclose to any other person any information received during the course of the arbitration proceedings from either competent authority or the arbitration panel. The mutual agreement procedure under [the Convention], as well as the arbitration proceeding under this Part, with respect to the case shall terminate if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the [Contracting States], a person that presented the case or one of that person’s advisors materially breaches that agreement.

6.     Omitted.

7.     Omitted.

Article 24 (Agreement on a Different Resolution) of the MLI Omitted.

Article 25 (Costs of Arbitration Proceedings) of the MLI

In an arbitration proceeding under this Part, the fees and expenses of the members of the arbitration panel, as well as any costs incurred in connection with the arbitration proceedings by the [Contracting States], shall be borne by the [Contracting States] in a manner to be settled by mutual agreement between the competent authorities of the [Contracting States]. In the absence of such agreement, each [Contracting State] shall bear its own expenses and those of its appointed panel member. The cost of the chair of the arbitration panel and other expenses associated with the conduct of the arbitration proceedings shall be borne by the [Contracting States] in equal shares.

Article 26 (Compatibility) of the MLI

1.     Omitted.

2.     Any unresolved issue arising from a mutual agreement procedure case otherwise within the scope of the arbitration process provided for in this Part shall not be submitted to arbitration if the issue falls within the scope of a case with respect to which an arbitration panel or similar body has previously been set up in accordance with a bilateral or multilateral convention that provides for mandatory binding arbitration of unresolved issues arising from a mutual agreement procedure case.

3.     [Nothing] in this Part shall affect the fulfilment of wider obligations with respect to the arbitration of unresolved issues arising in the context of a mutual agreement procedure resulting from other conventions to which the [Contracting States] are or will become parties.

4.     Omitted.

Subparagraph a) of paragraph 2 of Article 28 (Reservations) of the MLI

Pursuant to Subparagraph a) of paragraph 2 of Article 28 of the MLI, Australia formulates the following reservations with respect to the scope of cases that shall be eligible for arbitration under the provisions of Part VI of the MLI:

Australia reserves the right to exclude from the scope of Part VI [of the MLI] any case to the extent that it involves the application of Australia’s general anti-avoidance rules contained in Part IVA of the Income Tax Assessment Act 1936 and section 67 of the Fringe Benefits Tax Assessment Act 1986. Australia also reserves the right to extend the scope of the exclusion for Australia’s general anti-avoidance rules to any provisions replacing, amending or updating those rules. Australia shall notify the Depositary of any such provisions that involve substantial changes.

Pursuant to Subparagraph a) of paragraph 2 of Article 28 of the MLI, the French Republic formulates the following reservations with respect to the scope of cases that shall be eligible for arbitration under the provisions of Part VI of the MLI (see translation to English below):

1.     La France se réserve le droit d’exclure des cas pouvant être soumis à l’arbitrage en vertu des dispositions de la partie VI les cas concernant des éléments de revenu ou de fortune non imposés par une Juridiction contractante dès lors que ces éléments de revenu ou de fortune ne sont pas inclus dans une base imposable dans cette Juridiction contractante ou sur la base que ces éléments de revenu ou de fortune bénéficient d’une exemption ou d’un taux d’imposition nul en vertu de la législation nationale fiscale de cette Juridiction contractante.

2.     La France se réserve le droit d'exclure des cas pouvant être soumis à l'arbitrage en vertu des dispositions de la Partie VI les cas pour lesquels un contribuable fait l'objet d'une sanction administrative ou pénale pour fraude fiscale, omission volontaire, manquement grave à une obligation déclarative.

3.     La France se réserve le droit d'exclure des cas pouvant être soumis à l'arbitrage en vertu des dispositions de la partie VI les cas qui portent en moyenne et par exercice ou par année d'imposition sur une base imposable inférieure à 150 000 €.

4.     La France se réserve le droit d’exclure des cas pouvant être soumis à l’arbitrage en vertu des dispositions de la partie VI les cas entrant dans le champ d'application d'une procédure d'arbitrage prévue par un instrument juridique élaboré sous l'égide de l'Union européenne, tel que la Convention relative à l'élimination des doubles impositions en cas de correction des bénéfices d'entreprises associées (90/436/CEE), ou tout autre instrument postérieur.

5.     La France se réserve le droit d'exclure des cas pouvant être soumis à l'arbitrage en vertu des dispositions de la Partie VI d'un commun accord avec l'autorité compétente de l'autre Etat. Cet accord sera formulé avant le début de la procédure d’arbitrage et notifié à la personne qui a soumis le cas.

6.     Lorsqu’une réserve formulée par un autre Etat en vertu de l’article 28(2)(a) de la Convention fait référence à son droit interne, la France se réserve le droit d’exclure des cas pouvant être soumis à l’arbitrage en vertu des dispositions de la partie VI les cas qui seraient exclus des cas pouvant être soumis à l’arbitrage en vertu des dispositions de cette même partie VI si les réserves de l’autre Etat étaient formulées en se référant à toute disposition similaire de droit français ou à toute disposition ultérieure remplaçant, amendant ou modifiant ces dispositions. Les autorités compétentes françaises consulteront les autorités compétentes des autres Etats contractants afin de préciser dans l’accord prévu à l’article 19(10) chacune de ces dispositions similaires existant dans le droit français.

NAATI Accredited translation of the authentic French text of the French Republic’s reservations under subparagraph a) of paragraph 2 of Article 28 of the MLI

1.     France reserves the right to exclude from the cases that shall be eligible for arbitration under the provisions of Part VI cases involving elements of income or capital that are not taxed by a Contracting Jurisdiction when such elements of income or capital are not included in a tax base in that Contracting Jurisdiction or on the basis that such elements of income or capital are entitled to tax exemption or a zero tax rate under the national tax law of that Contracting Jurisdiction.

2.     France reserves the right to exclude from the cases that shall be eligible for arbitration under the provisions of Part VI cases for which a taxpayer is the subject of an administrative or criminal penalty for tax fraud, deliberate omission or serious failure to comply with a declaratory obligation.

3.     France reserves the right to exclude from the cases that shall be eligible for arbitration under the provisions of Part VI cases that involve on average, and per fiscal year or tax year, a taxable income of less than 150 000 €.

4.     France reserves the right to exclude from the cases that shall be eligible for arbitration under the provisions of Part VI cases falling within the scope of an arbitration procedure provided for by a legal instrument formulated under the aegis of the European Union, such as the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (90/436/EEC) or any other subsequent instrument.

5.     France reserves the right to exclude cases that shall be eligible for arbitration under the provisions of Part VI by mutual agreement with the competent authority of the other State. Such agreement shall be formulated before the beginning of the arbitration procedure and shall be notified to the person who has presented the case.

6.     When a reservation formulated by another State pursuant to article 28(2)(a) of the Convention makes reference to its internal law, France reserves the right to exclude from the cases that shall be eligible for arbitration under the provisions of Part VI cases that would be excluded from the cases eligible for arbitration under the provisions of Part VI if the reservations of the other State were formulated by reference to any similar provision in French law or to any subsequent provision replacing, amending or modifying such provisions. The French competent authorities will consult the competent authorities of the other Contracting States for the purpose of specifying in the agreement provided for at article 19(10) each of the similar provisions existing in French law.

Article 25

EXCHANGE OF INFORMATION

1.     The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes referred to in paragraph 3 of Article 2 insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1.

2.     Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administration bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

3.     In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a)     to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b)     to supply information which is not obtainable by the competent authority under the laws or in the normal course of the administration of that or of the other Contracting State;

(c)     to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

4.     If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 except where such limitations would preclude a Contracting State from supplying information solely because it has no domestic interest in such information.

5.     In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or relates to ownership interests in a person.

Article 26

ASSISTANCE IN RECOVERY

1.     The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Article 1. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

2.     The term “revenue claim” as used in this Article means an amount owed in respect of taxes referred to in paragraph 3 of Article 2, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

3.     When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

4.     When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

5.     Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraphs 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

6.     Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.

7.     Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be:

a)     in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

b)     in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

8.     In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

a)     to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

b)     to carry out measures which would be contrary to public policy (ordre public);

c)     to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

d)     to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State;

e)     to provide assistance if that State considers that the taxes with respect to which assistance is requested are imposed contrary to generally accepted taxation principles.

Article 27

DIPLOMATIC AND CONSULAR PRIVILEGES

1.     Nothing in this Convention shall affect diplomatic or consular privileges under the general rules of international law or under the provisions of special international agreements.

2.     This Convention shall not apply to international organisations, to organs or officials thereof or to persons who are members of a diplomatic or consular mission of a third State and who, being present in a Contracting State, are not treated in either Contracting State as residents in respect of taxes on income.

Article 28

MISCELLANEOUS

Notwithstanding the provisions of subparagraph b) of paragraph 1 of Article 2 of this Convention, for the purposes of the assessment in respect of the capital tax (“l’impôt de solidarité sur la fortune”) of an individual who is resident of France and is a citizen of Australia without being a national of France, property situated outside France which that individual owns on 1 January in each of the five calendar years following that in which the individual became a resident of France shall not be included in the basis of assessment of the tax pertaining to each of those five years. If that person ceases to be a resident of France for a period of at least three years, and then becomes a resident of France again, property situated outside France which that person owns on 1st January in each of the five calendar years following that in which the person became a resident of France again shall not be included in the basis of assessment of the tax pertaining to each of those five years.

Article 29

PARTNERSHIPS

1.     In the case of a partnership or similar entity which has its place of effective management in Australia and which is treated in Australia as fiscally transparent:

a)     a partner who is a resident of Australia and whose share of the income, profits or gains of the partnership is taxed in Australia in all respects as though such amounts had been derived by the partner directly, shall be entitled to the benefits of this Convention with respect to their share of such amounts arising in France as though the partner had derived such amounts directly;

b)     a partner who is a resident of France :

(i)     shall be entitled to the benefits of this Convention with respect to their share of such income, profits or gains of the partnership arising in Australia as though the partner had derived such amounts directly; and

(ii)     shall be taxable in respect of their share of such income, profits or gains of the partnership arising in France as though the partner had derived such amounts directly but any such amounts which are taxed in Australia shall be treated for the purpose of paragraph 2 of Article 23 of this Convention as arising from sources in Australia.

2.     In the case of a partnership which has its place of effective management in a State other than a Contracting State and which is treated in that third State as fiscally transparent, a partner who is a resident of a Contracting State and whose share of the income, profits or gains of the partnership is taxed in that Contracting State in all respects as though those amounts had been derived directly by the partner, shall be entitled to the benefits of this Convention with respect to their share of such amounts arising in the other Contracting State as though the partner had derived such amounts directly, subject to the following conditions:

a)     the absence of contrary provisions in a taxation convention between a Contracting State and the third State; and

b)     the partner’s share of the income, profits or gains of the partnership is taxed in the same manner, including the nature or source of those amounts and the time when those amounts are taxed, as would have been the case if the amounts had been derived directly; and

c)     it is possible to exchange information concerning the partnership or partners under the terms of a taxation convention between the Contracting State in which the income, profits or gains arise and the third State.

3.     For the purposes of paragraphs 1 and 2 of this Article, income, profits or gains shall be deemed to arise in a Contracting State in particular where they are attributable to a permanent establishment which the partnership or entity has in that State.

4.     Where, under any provision of this Convention, a partnership or other group of persons which is a resident of France in accordance with paragraph 5 of Article 4, is entitled to relief from tax in Australia on any income, profits or gains, that provision shall not be construed as restricting the right of Australia to tax any member of the partnership or other group who is a resident of Australia on their share of such amounts; but any such amounts shall be treated for the purposes of paragraph 1 of Article 23 of this Convention as arising from sources in France.

The following paragraph 1 of Article 7 of the MLI applies and supersedes the provisions of this Convention:

ARTICLE 7 OF THE MLI – PREVENTION OF TREATY ABUSE

(Principal purposes test provision)

Notwithstanding any provisions of [the Convention], a benefit under [the Convention] shall not be granted in respect of an item of income […] if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of [the Convention].

Article 30

ENTRY INTO FORCE

1.     The Contracting States shall notify each other in writing through the diplomatic channel of the completion of their domestic requirements for the entry into force of this Convention. This Convention shall enter into force on the first day of the second month following the date of receipt of the last notification, and thereupon the Convention shall have effect:

a)     in the case of Australia:

(i)     in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following the date on which the Convention enters into force;

(ii)     in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following the date on which the Convention enters into force;

b)     in the case of France:

(i)     in respect of taxes on income withheld at source, for amounts taxable after the calendar year in which the Convention enters into force;

(ii)     in respect of taxes on income which are not withheld at source, for income relating, as the case may be, to any calendar year or accounting period beginning after the calendar year in which the Convention enters into force;

(iii)     in respect of the other taxes, for taxation the taxable event of which will occur after the calendar year in which the Convention enters into force.

c)     for purposes of Article 25, from the date of entry into force of this Convention ;

d)     notwithstanding the provisions of subparagraphs a) and b), Article 26 shall have effect from the date agreed in an exchange of notes through the diplomatic channel.

2.     The Agreement between the Government of Australia and the Government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed in Canberra on 13 April 1976 (as amended by the Protocol signed in Paris on 19 June 1989) and the Agreement between the Government of the Commonwealth of Australia and the Government of the French Republic for the avoidance of double taxation of income derived from international air transport signed in Canberra on 27 March 1969 shall be terminated and shall cease to have effect from the dates on which this Convention becomes effective in accordance with paragraph 1 of this Article.

3.     Notwithstanding the entry into force of this Convention, an individual who is entitled to the benefits of Article 19 of the Agreement between the Government of Australia and the Government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed in Canberra on 13 April 1976 (as amended by the Protocol signed in Paris on 19 June 1989) at the time of the entry into force of this Convention shall continue to be entitled to such benefits until such time as the individual would have ceased to be entitled to such benefits if the Agreement had remained in force.

Article 31

TERMINATION

This Convention shall continue in effect indefinitely, but either Contracting State may terminate the Convention by giving written notice of termination, through the diplomatic channel, to the other State at least 6 months before the end of any calendar year beginning after the expiration of 5 years from the date of its entry into force and, in that event, the Convention shall cease to be effective:

a)     in the case of Australia:

(i)     in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which the notice of termination is given;

(ii)     in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given ;

b)     in the case of France:

(i)     in respect of taxes on income withheld at source, for amounts taxable after the calendar year in which the notice of termination is given ;

(ii)     in respect of taxes on income which are not withheld at source, for income relating, as the case may be, to any calendar year or accounting period beginning after the calendar year in which the notice of termination is given ;

(iii)     in respect of the other taxes, for taxation the taxable event of which will occur after the calendar year in which the notice of termination is given.

In witness whereof the undersigned, duly authorised thereto, have signed this Convention.

Done in duplicate at Paris this twentieth day of June two thousand and six in the English and French languages, both texts being equally authentic.

FOR THE GOVERNMENT OF AUSTRALIA:

FOR THE GOVERNMENT OF THE FRENCH REPUBLIC:

ALEXANDER DOWNER

MINISTER FOR FOREIGN AFFAIRS

PHILIPPE DOUSTO-BLAZY

MINISTER OF FOREIGN AFFAIRS

PROTOCOL

THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE FRENCH REPUBLIC

Have agreed at the signing of the Convention between the two Governments for the avoidance of double taxation with respect to taxes on income and the prevention of fiscal evasion upon the following provisions, which shall form an integral part of the said Convention (in this Protocol referred to as “the Convention”):

1.     The competent authorities of the Contracting States may settle, jointly or separately, the mode of application of the Convention.

2.     With reference to paragraph 5 of Article 4 (Residence),

where a resident of a third State is a member of such partnership or group that is not subject to corporation tax in France, the Australian income tax liability in respect of the member’s share of the income, profits or gains of the partnership or group shall be determined in accordance with Australian domestic law, including the provisions of any taxation convention between Australia and that third State, it being understood that such partnership or group shall be treated as fiscally transparent for the purposes of entitlement to Australian tax benefits under that convention.

3.     With reference to Article 12 (Royalties),

the term “royalties” does not include payments for the use of spectrum licenses. The provisions of Article 7 of the Convention shall apply to such payments.

4.     With reference to Article 18 (Government service),

business activities carried on by a statutory body of a Contracting State include activities of that body which are not primarily supported by public funds of that State or of one or more political subdivisions or local authorities thereof.

In witness whereof the undersigned, duly authorised thereto, have signed this Convention.

Done in duplicate at Paris this twentieth day of June two thousand and six in the English and French languages, both texts being equally authentic.

FOR THE GOVERNMENT OF

AUSTRALIA:

FOR THE GOVERNMENT OF

THE FRENCH REPUBLIC:

ALEXANDER DOWNER

MINISTER FOR FOREIGN AFFAIRS

PHILIPPE DOUSTO-BLAZY

MINISTER OF FOREIGN AFFAIRS

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).