Agreement Between Competent Authorities Regarding Article 12 (Royalties) of the Convention between Canada and France

Competent authorities from Canada and France have reached an agreement regarding the exemption for royalties in respect of cultural motion picture films arising in one of the two countries and paid to a resident of the other country, as provided for in paragraph 4 of Article 12 of the Convention Between Canada and France for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and on Capital (the Convention).

Paragraph 4 of Article 12 of the Convention provides specific provisions regarding royalties paid for motion pictures that are defined under Canadian and French domestic law and regulations. These laws and regulations have continued to change, but the principles of the Convention have not. To address this, the competent authorities have agreed that royalties in respect of cultural motion picture films arising in one of the countries and paid to a resident of the other country who is subject to tax therein in respect thereof shall be taxable only in that other country where:

• for France, they are paid to a resident of France in respect of French motion pictures that meet the criteria set forth in Article 10 of Decree 99-130 dated February 24, 1999 and that are included in the list of films referred to in Article 1 of Decree 2002-568 dated April 22, 2002, which is used by the Art and Experimental Cinema Board (Commission du cinéma d’art et d’essai) provided for in Article 5 of the same Decree;
• for Canada, they are paid to a resident of Canada in respect of films wholly or principally directed and produced in Canada and which are accepted for pre-screening as an eligible Canadian film at any international film festival.

Eligible Canadian films shall be certified by Telefilm Canada.

This agreement also applies to past years, within statute-barred limitations.