Scenario: your French parent lends EUR 3 million to its Vietnamese subsidiary for factory expansion. Vietnam pays EUR 150,000 in annual interest, withheld at 5% CIT contractor tax. The Vietnam–France treaty holds a rare prize: 0% source tax on interest. How is it claimed?
1. The Vietnam–France tax treaty: 0% interest is the standout
The double taxation agreement between Vietnam and France (signed 1993 — in force as of 20/10/2026) caps Vietnam’s source withholding for French residents (as beneficial owners):
- Interest: 0% — exempt at source (verified via PwC Tax Summaries). Versus 5% domestic CIT, a EUR 3 million loan paying EUR 150,000/year in interest saves EUR 7,500/year in withholding. Among Vietnam’s rare treaties fully exempting interest.
- Royalties: capped at 10% — matching domestic rates.
- Dividends (Article 10): two bands by ownership ratio — check the original Article 10 text before applying.
2. Qualifying for 0% interest: beneficial ownership
The 0% rate needs the French party as beneficial owner of the interest — a French parent lending directly from its own funds qualifies. Back-to-back structures — the French company borrowing from a third party and on-lending to Vietnam on a spread — risk being treated as non-beneficial owners, losing the relief. Loan contracts must clearly show: lender, arm’s-length rate, repayment schedule.
3. The dossier: French COR and filing deadline
French companies obtain a tax residence certificate from the Direction generale des Finances publiques (DGFiP). The Vietnam-side dossier under Article 62 of Circular 80/2021/TT-BTC (in force): Form 01/HTQT; the French party’s residence certificate (original/certified copy, consular-legalized); loan contract copies; authorization letter if filing on behalf. Deadline: at least 15 days before the tax return filing deadline, at the tax office directly managing the Vietnamese party. French certificates are in French — notarized translation required.
Frequently asked questions
1. What tax applies to interest paid to the French company?
0% under the treaty (exempt at source) — versus 5% domestic CIT. Condition: the French party is the beneficial owner.
2. Do back-to-back loans get 0%?
High risk — spread-earning back-to-back lending may fail the beneficial-owner test and lose the relief.
3. Where is French residence certified?
The DGFiP — French-language certificates need notarized translation for filing in Vietnam.
4. When do we file?
At least 15 days before the tax return filing deadline, at the tax office directly managing the Vietnamese party (Article 62, Circular 80/2021/TT-BTC).
5. What about royalties from France?
Capped at 10% — matching domestic rates; the treaty adds no further cut for royalties.
This article has been quality-reviewed by the FLAW AI Legal Council