Julien · France and Mauritius

This is Tax case 01, a fictional file. Julien, Camille and the companies are invented. The treaty articles and the domestic rules below are the published texts. The five short treaty simulations in chapter 02 stay in that chapter.

1. Meet the case: Julien, his family and three businesses

Julien is a French national, married to Camille, with two children. He owns Hexagone SAS, a French operating company with French employees, premises, customers and genuine management in France. It also owns European subsidiaries. He plans a real Mauritius trading business, Lagoon Trading Ltd, with local staff, premises and customers. Separately, he is considering whether a Mauritius holding company has a commercial role in the group.

We compare two situations. These are fictional learning cases, not residence determinations about a real person.

Fact	Scenario A: family remains in France	Scenario B: family home moves to Mauritius
Immigration	Valid Investor Occupation Permit, assumed	Same valid permit
Presence	235 days in Mauritius, 90 in France, 40 elsewhere in the illustrated 365-day period	Same travel pattern, to isolate the effect of the other facts
Family	Camille and dependent children live in the available French family home	Camille and the children ordinarily live with Julien in Mauritius
Mauritius accommodation	A continuously available home, used by Julien	The settled family home, with ordinary family life and schooling there
French property	Family house available and occupied by spouse/children; another house rented	Former family house genuinely let to an independent tenant; another rented property retained
Business role	Julien still regularly directs substantial French operations during visits and remotely	An empowered French team runs the SAS; Julien runs the Mauritius business from Mauritius
Later variation	A child’s studies in France do not change the existing family pattern	One adult child later moves from Mauritius to France solely to study

The day figures are an illustration, not a substitute for two tax calendars. France normally assesses an individual’s calendar-year income; Mauritius uses its July–June income year. Reconstruct the actual travel days separately for each relevant period, including departure/arrival treatment. A 235-day count over an arbitrary twelve months does not prove either statutory test.

Our numerical dividend model starts with €200,000 of ordinary French taxable corporate profit, a 25% French corporation-tax charge and full distribution of the €150,000 balance. Hexagone has annual turnover above €10 million, so the illustration does not use the small-company 15% band. It is below the thresholds for the excluded large-group measures. Other taxes, distribution reserves and ownership restructuring are dealt with separately, not silently assumed to disappear.

2. Read the actual treaty, article by article

Use the French authority’s consolidated treaty incorporating MLI effects alongside the MRA’s English presentation. The 1980 convention, its protocols and the applicable Multilateral Instrument provisions must be read together. A synthesised document is a reading aid; authentic instruments prevail.

The treaty has 31 articles, rather than textbook chapters. Open each below for its rule and its practical consequence. Read Articles 4, 5, 7, 10, 15 and 24 particularly closely for Julien.

Read all 31 articles

Open an article for its purpose and its use in Julien's case. These are original explanations, read alongside the actual text and protocol.

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31 of 31 articles shown

01Persons covered

Start with a person resident in one or both states. Nationality, a bank account or an Investor Occupation Permit is not the complete test.

In the case: Identify the individual, the French SAS and the Mauritius company separately. Each has its own eligibility.

Read article 1 in the consolidated treaty ↗

02Taxes covered

Income and capital taxes, including named taxes and qualifying later similar taxes. Some printed tax names are historical.

In the case: Do not use the treaty to eliminate VAT, customs, immigration requirements, gift tax or social-insurance contributions. Check newer levies separately.

Read article 2 in the consolidated treaty ↗

03General definitions

Defines person, company, enterprise, national, international traffic and competent authority. Undefined terms follow the specified domestic-law rule unless context requires otherwise.

In the case: A shareholder and company remain distinct. Read the protocol’s extension for supplementary container transport.

Read article 3 in the consolidated treaty ↗

04Residence

Domestic residence first. For a dual-resident individual: permanent home, centre of vital interests, habitual abode, nationality, then competent-authority agreement. The entity tie-breaker in this treaty is place of effective management.

In the case: Apply the sequence to each family scenario. A 183-day count does not override the earlier tests.

Read article 4 in the consolidated treaty ↗

05Permanent establishment

A fixed business place, including an office or place of management, can be a PE. Construction/installation and related supervision have six-month clauses. Read the authority-to-contract rule and the controlled, exclusive/almost-exclusive agent provision.

In the case: An ongoing French home office can matter. Subsidiary ownership alone does not create a PE. The construction threshold is not a general safe harbour.

Read article 5 in the consolidated treaty ↗

06Immovable property income

The property state may tax rental and other specified property income. The protocol addresses certain property-related company rights.

In the case: A Lyon rental remains connected to France after a genuine Mauritius relocation.

Read article 6 in the consolidated treaty ↗

07Business profits

Ordinary profits generally follow enterprise residence unless there is a PE in the other state. Attribute the appropriate profits and expenses; special income articles take priority.

In the case: Changing invoice addresses does not relocate actual French business activity. The protocol treats specified technical/consultancy services and equipment-use receipts under this article.

Read article 7 in the consolidated treaty ↗

08Shipping and air transport

International-traffic profits follow the specialised effective-management rule, with shipping and joint-operation qualifications.

In the case: An ordinary seller does not qualify merely because it ships goods internationally.

Read article 8 in the consolidated treaty ↗

09Associated enterprises

Non-arm’s-length conditions between associated enterprises can justify profit adjustments. Read the MLI corresponding-adjustment provision and dispute process.

In the case: Support service fees, loans and management charges with actual functions and commercial pricing. Board approval alone does not prove the price.

Read article 9 in the consolidated treaty ↗

10Dividends

For an eligible beneficial owner, source tax is capped at 5% for a qualifying company directly holding at least 10% of capital; 15% otherwise. The payer’s corporate profit tax is separate. PE exceptions and historic avoir fiscal/précompte provisions require care.

In the case: France’s ordinary 12.8% individual withholding is below the 15% cap. Printed historical refund clauses are not an automatic modern refund entitlement.

Read article 10 in the consolidated treaty ↗

11Interest

The ordinary article allows source taxation without a general numerical cap. There is a specified state/public-body/banking beneficial-owner exception, plus source, PE and excess-payment rules.

In the case: Do not copy the dividend rates onto a shareholder loan. The protocol also contains a narrowly identified financing exception.

Read article 11 in the consolidated treaty ↗

12Royalties

Ordinary qualifying royalties have a 15% source ceiling, but specified copyright payments have an exclusive-residence rule. Definitions, source, PE connection and excessive related-party payments matter.

In the case: Classify trademarks, software, equipment rental and consultancy separately. The protocol can point a technical service to Article 7.

Read article 12 in the consolidated treaty ↗

13Capital gains

Property and PE/fixed-base gains have special allocations; other gains follow the stated residual rule. Protocol rules cover property-related shares and substantial participation.

In the case: Do not promise a tax-free sale of a French business after departure. The protocol’s substantial interest test includes 25% of profit rights with associated/related holdings; exit tax is another issue.

Read article 13 in the consolidated treaty ↗

14Independent personal services

Independent professional income generally follows residence unless a fixed base is regularly available in the other state; attributable income can be taxed there.

In the case: A self-employed consultant is not automatically covered by the employee 183-day exception.

Read article 14 in the consolidated treaty ↗

15Employment income

Look where employment is exercised. The short-visit exception requires all three conditions: no more than 183 days in the fiscal year concerned, a non-host employer and no host PE/fixed base bearing remuneration.

In the case: French workdays for a French employer can be taxable from day one. A Mauritius bank payment does not change the physical work location.

Read article 15 in the consolidated treaty ↗

16Directors’ fees

Board remuneration may be taxed in the state where the paying company is resident.

In the case: Separate genuine board fees from executive employment pay; labels cannot replace the actual function.

Read article 16 in the consolidated treaty ↗

17Artists and athletes

Performance-state taxation can apply, including income routed to another person. Specific publicly funded exceptions exist.

In the case: A company around a performer does not automatically turn performance income into protected ordinary business profits.

Read article 17 in the consolidated treaty ↗

18Pensions

Private pensions generally follow residence, subject to the government-service article. Social-security pensions and similar payments have a separate source-state rule.

In the case: Identify the pension scheme before assuming all retirement receipts follow the same allocation.

Read article 18 in the consolidated treaty ↗

19Government service

Public remuneration and pensions have payer-state rules and residence/nationality exceptions; government business activities can return to ordinary articles.

In the case: Do not apply the private founder examples unchanged to French public-service pay.

Read article 19 in the consolidated treaty ↗

20Students and apprentices

Qualifying overseas-source maintenance, education and training payments are protected in the host state. Paragraph 2 also covers specified education/training-related work or work necessary for maintenance.

In the case: A child moving from Mauritius solely to study in France differs from a child who always lived in France. The article does not exempt every capital gift.

Read article 20 in the consolidated treaty ↗

21Teachers and researchers

Specified host-state relief can apply for up to two years, including a liability-to-tax condition in the other state. Primarily private-benefit research is excluded.

In the case: A visiting lecturer or remote employee does not qualify solely by job title.

Read article 21 in the consolidated treaty ↗

22Other income

Income not dealt with earlier generally follows residence, with an effective-connection exception.

In the case: Use the residual article only after eliminating specific categories. A dividend is not “other income” because the payer calls it that.

Read article 22 in the consolidated treaty ↗

23Capital / wealth

Property and PE/fixed-base assets have situs rules; transport assets and residual wealth have separate allocations. Read the property-rights protocol.

In the case: French real estate may remain within IFI; holding it through a company does not automatically remove it.

Read article 23 in the consolidated treaty ↗

24Double-tax relief

Different income categories use exemption or credit. Mauritius credits covered French dividends subject to a same-income cap. France generally exempts qualifying Mauritius income outside listed credit categories; Mauritius dividends have an express 25%-of-gross credit subject to a French-tax limit.

In the case: Read each direction separately, preserve effective-rate/progression rules, and distinguish a credit from a refund. Never simply add both countries’ headline rates.

Read article 24 in the consolidated treaty ↗

25Non-discrimination

Protects against specified nationality, PE and ownership discrimination subject to its wording and protocol qualifications.

In the case: It does not promise identical resident/non-resident treatment, every personal allowance or every EU exemption.

Read article 25 in the consolidated treaty ↗

26Mutual agreement procedure

The MLI presentation allows a case to either authority. The treaty limit is three years from first notification of non-conforming taxation. Arbitration has further timing, conditions and reservations.

In the case: Preserve domestic appeal deadlines too. MAP does not automatically suspend collection or guarantee relief.

Read article 26 in the consolidated treaty ↗

27Exchange of information

The 2011 amendment strengthens exchange of foreseeably relevant information, including bank/ownership information, subject to confidentiality and other limits.

In the case: Maintain consistent declarations. A Mauritius bank account is not a secrecy strategy.

Read article 27 in the consolidated treaty ↗

28Diplomatic and consular personnel

Preserves specified privileges and special residence rules for diplomatic/consular categories.

In the case: An investor residence permit gives no diplomatic tax status.

Read article 28 in the consolidated treaty ↗

29Territorial scope

Defines Mauritius and French European/overseas departments and relevant maritime areas; extensions follow a specified process.

In the case: Europe is not one treaty party. Germany, Spain and other operations need their own tax and EU analysis.

Read article 29 in the consolidated treaty ↗

30Entry into force

Entry into force and application to withholding and tax periods are separate. The MLI has additional timing notes.

In the case: Use payment-year versions. The French presentation records MLI withholding effects from 1 January 2021 for France and separate Mauritius timing.

Read article 30 in the consolidated treaty ↗

31Termination

Sets notice and final application rules if the treaty is terminated.

In the case: Check the official registers for the transaction year. A downloaded treaty does not update itself.

Read article 31 in the consolidated treaty ↗

The protocol and MLI belong in the same file

The protocol is not an optional appendix. Among other matters, it addresses equipment and specified technical/consultancy receipts under Article 7, attribution of PE profits, a possible French branch-distribution charge capped at 15%, and property-related/substantial-shareholding gains. For the latter, the substantial participation provision uses 25% of company profit rights, including specified associated or related holdings. A founder cannot assume all French share-sale gains become exclusively taxable in Mauritius.

The MLI adds an anti-abuse purpose and principal purpose test (PPT). A benefit can be refused where obtaining it was one of an arrangement’s principal purposes, unless granting it accords with the relevant provision’s object and purpose. Having some commercial activity is not an automatic PPT clearance.

The published consolidated text retains an effective-management tie-breaker for companies. Do not import a different treaty’s mandatory competent-authority residence rule or a 365-day dividend holding condition merely because it appears in an OECD model or another bilateral agreement.

3. The vocabulary that changes the answer

Term	Meaning in this guide	Evidence to examine
Domestic tax residence	A connection established under one state’s own law	Statutory tests, dates, returns and actual living/working arrangements
Treaty residence	Residence for applying this treaty, including a tie-breaker if both domestic systems claim residence	The full Article 4 sequence, not just a certificate
Permanent home available	A dwelling continuously available for ordinary use; it need not be owned	Lease, access, occupancy and whether a genuine tenant prevents personal use
Foyer	French domestic concept of the person’s habitual family/home life	Where spouse/partner and dependent children ordinarily live; temporary work absences
Centre of economic interests	French domestic criterion concerning main investments, affairs, activities and income connections	Actual control, investments and income; not a single bank-balance test
Centre of vital interests	Treaty comparison of personal and economic relations together	Family, social life, occupation, property, administration of affairs and the overall pattern
Habitual abode	The regular pattern of living, relevant only at the later treaty step	Frequency, duration and regularity over the relevant facts; not a free-standing “183-day election”
Place of effective management	Where the key management and commercial decisions needed for the business as a whole are actually made	Who decided strategy, finance, acquisitions, risk and senior appointments, and where
Central management and control	A domestic corporate-residence concept; related to, but not automatically identical with, every treaty test	Substance of control and decision-making, not incorporation alone
Permanent establishment / fixed base	A taxable business or professional connection in the other state	Premises at disposal, permanence, activities, people and contracting authority
Beneficial owner	The recipient with the relevant right to use and enjoy the income, rather than a mere conduit bound to pass it on	Agreements, funding, discretion, obligations and actual cash use
Source	The legal connection of a particular income item to a jurisdiction	Work location, payer, property, activity and the applicable statutory/treaty rule
Withholding	Tax collected by the payer from a payment	Gross payment, certificate, rate, remittance to the authority and refund procedure
Underlying tax	Corporate tax on the profits from which a dividend is paid, distinct from dividend withholding	Tax assessments, paid-tax evidence and the profit-to-distribution reconciliation
Remittance	For Mauritius individual foreign income, receipt in Mauritius or dealing with it there in the person’s interest/on their behalf	Origin, character, date, account movements and use—not just the final bank transfer
Arm’s length	Conditions independent businesses would agree in comparable circumstances	Functions, assets, risks, comparable terms and actual delivery

The definitions above explain a method. The operative treaty and statutory wording control. In particular, personal residence, corporate residence and a company’s PE are three separate analyses.

4. What the two domestic systems charge

France: natural persons

A French tax resident is generally within the worldwide-income system, subject to treaty relief. Under CGI article 4 B, the domestic residence criteria are alternatives: family home/principal stay, a non-accessory professional activity, or the centre of economic interests in France. More than half the year outside France does not automatically defeat a French foyer. Review each spouse separately; one spouse’s move need not settle the other’s position. DGFiP residence guidance.

Ordinary income uses progressive bands and a household quotient familial, with caps, deductions, credits and other rules. For orientation, the 2026 assessment of 2025 income, per tax share, is:

Portion of net taxable income per share	Rate
Up to €11,600	0%
€11,600–€29,579	11%
€29,579–€84,577	30%
€84,577–€181,917	41%
Above €181,917	45%

These are marginal bands, not a single rate on all earnings. As a simple one-share example, €30,000 gives €1,977.69 + €126.30 = €2,103.99 of gross scale tax before applicable adjustments. Julien’s family assessment is different. Do not relabel this as the final 2027 assessment scale for 2026 earnings; that future assessment needs its own legislation and filing-year check. Official calculation guide.

For ordinary resident dividends in 2026, the default illustration uses 12.8% income tax plus 18.6% social charges = 31.4%, before any applicable high-income contributions or treaty credit. A global option for the progressive scale may change the result; qualifying dividends may then receive a 40% allowance for income tax, not a blanket 40% reduction of social charges. Product, timing, affiliation and special-status exceptions need separate checking. DGFiP investment-income guidance.

A non-resident’s ordinary French dividend is generally subject to 12.8% withholding, with no French social levies on that non-resident investment income, subject to relevant exceptions and any more favourable treaty treatment. A 15% treaty ceiling does not raise 12.8% to 15%. DGFiP non-resident dividends.

France: companies

Ordinary French corporation tax is 25% of taxable profit. The conditional SME regime applies 15% to the first €42,500, with tests including turnover, paid-up capital and qualifying ownership. A SAS and a SARL are different legal/governance choices, not automatic ways to escape corporate tax. Payroll, VAT, local business taxes and high-turnover/group contributions are additional questions. Official SAS tax guide.

For the illustrated SAS: €200,000 × 25% = €50,000 corporation tax; €150,000 remains before distribution formalities. Changing its shareholder to a Mauritius company does not erase that €50,000.

Mauritius: individuals and companies

Under Income Tax Act section 73, individual residence can arise through domicile subject to the permanent-abode qualification, 183 days or more in the income year, or 270 days or more across that income year and the two preceding income years. Investor permission is a separate immigration matter.

Sections 5 and 6 require careful treatment of foreign income: an individual’s foreign income is brought into the statutory charge when received in Mauritius or dealt with there in the individual’s interest/on their behalf. The appropriate currency-conversion rule also matters. Work actually done in Mauritius does not become foreign-source merely because a foreign customer or overseas bank pays for it.

For the income year beginning 1 July 2026, the enacted ordinary individual bands are:

Portion of chargeable income	Rate
First Rs 500,000	0%
Next Rs 500,000	10%
Next Rs 11 million	20%
Remainder above Rs 12 million	35%

An ordinary company starts at 15% of chargeable income. Qualifying foreign dividends received by a non-bank company can have an 80% partial exemption subject to the exact conditions; this is not an individual exemption. Foreign-credit relief is an alternative requiring evidence, and qualifying underlying corporate tax can matter.

The ordinary exemption for dividends paid by a Mauritius-resident company remains in Second Schedule Part II, Sub-part B item 1. It does not automatically exempt an individual receiving dividends directly from a French company. Separate charges and special regimes still need review.

Sources: Income Tax Act, Finance Act 2026, sections 7(v) and 28(12), Foreign Tax Credit Regulations, especially 3–8. Read the earlier consolidation with the amendments.

5. Scenario A: 235 days in Mauritius, family in France

Working conclusion on the stated facts: do not treat Julien as having safely left French treaty residence. The French family home and substantial French economic connections make a French conclusion strong, despite his Mauritius permit and presence. This is a fact-based inference, not a rule that family location always wins.

1. French domestic law: his foyer remains in France. His ongoing French professional/economic connections provide additional questions.
2. Mauritius domestic law: the relevant 183-day test can be satisfied if the days fall within the correct income year. Dual domestic residence is possible.
3. Permanent home: homes are available in both states, so simply showing the Mauritius lease does not finish Article 4.
4. Centre of vital interests: spouse, dependent children, established family life, business role and investments must be weighed together. Here the facts point strongly towards France.
5. Later steps: habitual abode, nationality and agreement are used only if the prior tests do not resolve the issue. French nationality is not the first test.

A Mauritius tax residence certificate may document domestic residence; it is not a unilateral cancellation of France’s claim. Obtain a reasoned residence position covering both countries and the exact dates. A child’s temporary holiday in Mauritius or a stack of board minutes does not establish a family relocation.

Consequences for the money

• Julien’s French SAS dividend is an ordinary French-resident dividend in the baseline. Paying it into his Mauritius account does not turn it into a non-resident French dividend.
• His Mauritius employment income can be taxable in Mauritius for work exercised there. With a Mauritius employer and 235 days there, the short-visit exception does not protect the ordinary case.
• For a French treaty resident, qualifying Mauritius employment income falls under the treaty’s Article 24(2)(a) exemption, with Article 24(2)(e) progression/effective-rate consequences. It is therefore wrong to say France necessarily charges its full ordinary income tax again on every rupee.
• Board fees, independent professional income and dividends use different credit categories. They must not be put into the salary exemption simply because all came from the same company.
• French workdays and any French PE of the Mauritius business need their own analysis.

Foreign income and accounts may remain reportable in France even where treaty relief applies. Use the applicable 2047/2042 and 3916/3916-bis instructions; exemption does not mean “leave it off the return”. Treaty Article 24, foreign-account guidance.

6. Scenario B: the settled family home is in Mauritius

Working conclusion: Mauritius treaty residence is much better supported on the strengthened facts. The conclusion relies on the genuine family relocation, real Mauritius life and governance, and the French former home no longer being available—not merely the extra days.

If the only permanent home available is in Mauritius, Article 4 reaches that step before comparing all investments. A genuinely let French house can remain an investment without being a home available to Julien. A room or house he retains for unrestricted regular use may change that finding. Hotel visits require their own facts; ownership is not the sole test.

If both homes remain available, return to the centre-of-vital-interests comparison. A spouse and children in Mauritius are powerful personal connections, but substantial founder management and economic life retained in France cannot be ignored. Moving the family does not give a guaranteed result if the full facts point elsewhere.

For the ordinary supported Mauritius-resident case:

• France retains its taxing rights over French-source dividends, French rental/property gains and relevant French work or board fees.
• Mauritius applies its own source, remittance and relief rules. Direct French dividends and Mauritius-company dividends are different.
• Passive ownership of French companies and houses does not by itself make every Mauritius receipt taxable again in France.
• Returning to France to work can create employment-source tax, a company PE or management-residence issues without automatically changing personal residence for all income.
• The departure year may have different periods of residence. Establish the actual change date; do not assume an entire year is foreign-resident because the person was abroad on 31 December.

Before a real move, assess exit tax and any contribution/sale of existing French shares. French guidance identifies the six-of-ten-year residence condition and the €800,000 valuation or 50%-of-profits ownership thresholds. Deferral, guarantees, claims, releases and follow-up filings need their own analysis. A founder owning 100% should not skip this review merely because the shares are valued below €800,000. DGFiP exit-tax guide.

7. Which company should do what?

For these facts, a sensible starting structure to evaluate is to retain the actual French operating business in its French SAS and use a Mauritius company limited by shares for the genuine local trading operation. Do not add a holding company solely because a rate table looks attractive.

SIMPLE STARTING POINT

Julien Personal residence decided separately

↓ owns separately ↓

Hexagone SASFrench operations + European subsidiaries

Lagoon Trading LtdReal Mauritius trading operations

No Mauritius holding company is required just to have a Mauritius operating business.

POSSIBLE HOLDING STRUCTURE

Julien

↓ owns ↓

Mauritius HoldCoReal commercial role, management and resources · assess GBL

↓ owns ↓

Hexagone SASFrench operations remain in France

Transferring existing shares is a separate transaction: value it and review exit tax, gains and anti-abuse first.

Choice	When it can fit	What it does not solve
Direct ownership of the existing French SAS	Simpler ownership where no real Mauritius group-holding function is needed	Founder residence, exit tax, French operating tax and dividends still need analysis
Ordinary Mauritius trading company	Local staff, premises, contracts, stock and Mauritius customers	Overseas founder work and French contracting can still create French tax issues
Mauritius-resident holding company, with GBL where required	Genuine group ownership, financing, reinvestment and governance principally concerning foreign business	No automatic treaty entitlement, no automatic 3% all-in tax, and no erasure of French profit tax
French holding company above European subsidiaries	A genuine existing or planned European group function, subject to French participation and EU rules	Not automatically preferable; the eventual payment to Mauritius remains a separate leg
Authorised Company	A different non-resident/overseas-control framework where legally appropriate	Poor fit for this proposed Mauritius treaty-resident holding function; do not claim Mauritius treaty residence merely from registration
Trust or foundation	Particular succession, governance or asset-holding purposes after separate review	Not a routine substitute for an operating/holding company; French trust, attribution and reporting rules can be substantial

Under the Financial Services Act framework, a foreign-controlled resident corporation principally conducting business outside Mauritius may require a Global Business Licence. Incorporation and the licence are separate. The licence’s current conditions, management-company arrangements and substance must be checked with the FSC; a historical consolidation is not the whole current licensing file. FSC statutory source.

A Mauritius parent owning a French SAS does not become an EU parent. A German-to-French subsidiary payment may qualify for domestic/EU relief on its own facts; the subsequent French-to-Mauritius dividend uses a different analysis. A German-to-Mauritius payment cannot borrow the France–Mauritius rates. European Commission: Parent–Subsidiary Directive.

8. Follow a French dividend from profit to spendable cash

Keep four amounts separate: French company profit tax; French dividend withholding; Mauritius recipient tax; any later personal distribution tax. A bank transfer between a person’s own accounts is not another dividend.

Route 1: Julien remains a French treaty resident

On the stated ordinary 2026 assumptions, €200,000 French company profit produces €50,000 corporation tax and €150,000 dividend. The personal default charge is €150,000 × 31.4% = €47,100. Cash after those two illustrated layers is €102,900.

This is before any high-income contribution, scale election or other personal adjustment. There is no France–Mauritius dividend reduction merely because Julien receives the money in Mauritius. If both domestic systems seek tax, implement the residence finding and treaty limits in the actual returns rather than adding a second resident computation.

Route 2: Mauritius-resident Julien owns the French shares directly

The qualifying ordinary French individual withholding is €150,000 × 12.8% = €19,200. The treaty’s 15% ceiling does not increase it. Cash paid is €130,800.

Now examine Mauritius. For a standalone illustration, assume all the net proceeds are received in Mauritius, the gross dividend is brought into the computation, no other chargeable income or personal deductions, and a deliberately fixed €1 = Rs 50 teaching conversion. This is not a live exchange rate or a rule permitting one rate for every actual payment.

Without an underlying-tax claim, gross dividend income is Rs 7.5 million; ordinary Mauritius tax before credit is Rs 1.35 million. Direct French withholding is Rs 960,000, leaving Rs 390,000 of Mauritius income tax on these limited assumptions.

But Julien owns 100%, so stopping there can miss a major rule. Foreign Tax Credit Regulation 7 uses a resident person with at least 5% direct or indirect ownership; it is not confined by its wording to a corporate recipient. With the appropriate evidence of €50,000 underlying French corporation tax, Regulation 5 requires a gross-up:

• Gross dividend €150,000 + attributable underlying tax €50,000 = €200,000, or Rs 10 million.
• Ordinary Mauritius tax before credit = Rs 1.85 million on this standalone base.
• Evidenced foreign tax pool: €19,200 withholding + €50,000 underlying tax = €69,200, or Rs 3.46 million.
• Credit is capped at the relevant Mauritius tax: Rs 1.85 million. Mauritius residual income tax in this illustration is zero; the unused amount is not a Mauritius cash refund.

The cash remains €130,800. The gross-up is a tax computation, not extra cash. For partial remittances, other income, deductions, different profit pools or missing evidence, recalculate under Regulations 3–8. Do not transfer the entire foreign-tax pool to unrelated salary or rental income.

Route 3: a qualifying Mauritius holding company owns the French SAS

Assume a genuinely Mauritius-resident non-bank company, 100% direct ownership, beneficial ownership, commercial substance, no connected French PE, treaty/PPT eligibility and correct relief paperwork. The Article 10 ceiling is 5%: €7,500 on the €150,000 dividend. Cash received is €142,500.

Two alternative Mauritius approaches illustrate why “always elect 80% exemption” is poor advice:

Holding-company treatment	Mauritius computation	Mauritius residual income tax	Cash left at holding-company level
Qualifying 80% partial exemption	€150,000 × 20% × 15%; no foreign credit on that exempted-income route	€4,500	€138,000
Credit with fully evidenced underlying tax	(€150,000 + €50,000) × 15% = €30,000; credit pool €7,500 + €50,000, capped at €30,000	€0	€142,500

These exclude administration costs, properly attributable expenses, other levies and changes arising from actual tax facts. The company cannot claim both alternative reliefs on the same income. If it later makes a lawful dividend to Mauritius-resident Julien, the ordinary Mauritius domestic-dividend exemption is relevant; do not automatically add a second 15% personal tax. If Julien remains French treaty resident, the onward dividend instead opens the separate French analysis in section 10.

A founder cannot obtain the corporate 5% rate by sending his personally owned dividend to a company’s bank account. Transferring the shares has its own corporate, valuation, exit-tax, gains, anti-abuse and commercial consequences.

FOLLOW THE MONEY

One profit. Five tax paths.

Change the recipient and see each layer. This models the ordinary tax components in the examples, not a personal tax quotation.

French company profit before tax (€)€0–€400,000 · no other company adjustments

Recipient and Mauritius reliefFrench-resident individualMauritius-resident individual · underlying creditMauritius-resident individual · direct credit onlyMauritius company · underlying creditMauritius company · 80% exemption

Fixed teaching exchange rate: €1 = Rs 50. All dividends remitted. Individual owns 100%; qualifying corporate parent directly owns at least 10%. Underlying-credit paths assume paid-tax evidence and eligibility. French company turnover exceeds €10m; ordinary corporate tax is 25%.

Calculate this pathReset dividend example

Choose a path, then calculate.

Read the model boundaries

The Mauritius personal bands start on 1 July 2026. All allowances are zero, and the dividend is the individual's only chargeable income. Actual foreign-tax allocation, timing and the full return can differ. The partial-exemption path claims no credit on the same income. The French PFU components are 12.8% income tax plus 18.6% social charges; no scale election or high-income contribution is modelled. A large amount may trigger additional French contributions. Company outputs are cash retained by that company, before corporate levies, costs or onward distributions. No exit tax, restructuring tax, VAT or social-insurance calculation is included. Treaty residence, beneficial ownership, substance, anti-abuse and holding conditions are assumed satisfied; a selection here does not establish them.

9. The Mauritius trading business and visits to France

Suppose Lagoon Trading has Rs 20 million turnover and Rs 6 million chargeable profit after all assumed allowable operating costs, before the tax layers illustrated. It is an ordinary local trader, not an export-rate, banking, insurance or special-incentive case.

Company income tax is Rs 6 million × 15% = Rs 900,000. For a steady-state CSR illustration, assume the previous relevant accounting year’s chargeable income was also Rs 6 million and the ordinary 2% CSR charge applies: Rs 120,000. This leaves Rs 4,980,000 before any further adjustments and distribution requirements. It is not a first-year shortcut: CSR’s reference period, exclusions and payment arrangements need the actual law.

The facts are below the assumed CCR turnover threshold and company fair-share income threshold and outside the large multinational top-up regime. VAT, import duties, payroll contributions and licences still matter; turnover is not the profit base. Do not call 15% an all-in business burden.

The corporate result does not become French personal income merely because Julien owns the shares. Nevertheless, French residence/PE/attribution rules can change the result. Distribution creates another question:

• Scenario B: an ordinary dividend from the Mauritius-resident company to Mauritius-resident Julien is covered by the domestic-dividend exemption, on the assumptions stated.
• Scenario A: a dividend to French treaty-resident Julien is reportable under the French/treaty dividend rules. It is not made French-tax-free by Mauritius’s domestic exemption.
• Retained profits: “I have not distributed anything” is not a universal defence where corporate management, a French PE or an applicable controlled-foreign-structure rule points to France.

What happens when Julien works during a French visit?

Consider a separate employment example: annual salary €60,000, 220 actual workdays, 30 of them physically in France. For a simple time-apportioned service, the initial French-work allocation is €60,000 × 30/220 = €8,181.82. This is an allocation of pay, not the French tax bill; bonuses, leave and non-time-based duties may require another method.

Facts	Treaty analysis
Mauritius-resident Julien works temporarily in France for a genuinely Mauritius-resident employer; no French PE bears the pay; presence does not exceed 183 days in the fiscal year concerned	All Article 15(2) conditions may be met, so the covered employment remuneration remains exclusively taxable in Mauritius under that exception
Same days, but the employer is the French SAS	The non-French-employer condition fails; French-work pay can be taxed in France even though the visit is short
Same days and Mauritius employer, but its French PE bears the remuneration	The PE-cost condition fails; French tax may arise on attributable French-work pay
Julien is paid in his capacity as a board member of the French SAS	Start with Article 16, not the employee exception
Julien supplies professional services personally from a regularly available French fixed base	Start with Article 14, not a blanket 183-day rule
Julien is in France on holiday and does no work	Presence alone does not turn every Mauritius dividend or company profit into French-source earnings; personal residence still needs its annual review

For Scenario A, French-resident Julien’s actual French work remains a French tax question. His Mauritius-work salary may receive the Article 24 exemption with progression discussed earlier. Keep employment, director remuneration and business profit distinct.

A recurring French office used to negotiate and conclude Lagoon’s contracts can independently expose the company under Article 5. If Julien makes the company’s key decisions from France, corporate residence is another risk. The shareholder being in France for a few weeks neither automatically taxes the whole company nor gives it immunity.

10. Dividends travelling in the other direction

A Mauritius dividend paid to French treaty-resident Julien needs Article 10 plus Article 24(2)(c)–(e). The latter expressly provides a credit calculated at 25% of the relevant gross dividends, subject to the French-tax limit. It is a treaty-specific provision, not simply a refund of Mauritius withholding; do not omit it merely because ordinary Mauritius company dividends are locally exempt.

The French 2047 notice presents a Mauritius dividend percentage on a net-income basis, with a 25%-of-gross ceiling. Its guidance also explains credit imputation and the relevant French-tax limit, including social charges where applicable. This is why neither “31.4% again on the bank receipt” nor “31.4 − 25 = 6.4% for everybody” is a complete filing instruction.

Prepare a reconciliation showing:

1. The dividend legally declared by the Mauritius company.
2. Any actual source withholding and the cash received.
3. The gross amount required in the French return, including the treatment of the conventional credit where required.
4. The treaty credit on that corresponding base and the French-tax ceiling.
5. Income tax, social charges, high-income contributions and any already-paid instalments separately.

Arithmetic exercise, not a determination of the return base: if the verified French taxable gross base is €100,000 and the admissible conventional credit is €25,000, an ordinary 31.4% pre-credit charge is €31,400 and the residual of those illustrated components is €6,400. That does not establish that a €100,000 bank receipt is the same €100,000 taxable gross base. The exact gross/net reconstruction and current filing treatment must be resolved before presenting a spendable-cash figure for Scenario A.

We deliberately do not automate that unresolved reconstruction into a promised effective rate. The source material to reconcile is visible: treaty Article 24, 2026 2047 notice, credit method and Mauritius entry. A practitioner should confirm the actual distribution’s treatment and the appropriate filing-year forms.

11. Effective management: make the decisions real

Holding meetings in Mauritius is useful only when that is where genuine decisions are made. A signed resolution evidences a decision; it cannot relocate a decision that Julien already made in France and required directors to approve.

Distinguish strategic management from day-to-day operations. Strategy includes acquisitions, budgets, financing, major risks, dividend policy and senior appointments. Operations include routine orders, stock, staff scheduling and payments within delegated limits. The distinction depends on the business: in a small founder-led company, daily decisions may also be the real strategic management.

For a Mauritius company, use a governance arrangement that people can actually operate:

• Competent directors with information, time and authority to exercise judgment; satisfy the current company/licence requirements.
• A board calendar suited to the business and additional meetings when material decisions arise. There is no universal “four meetings = tax residence” safe harbour.
• Written reserved matters and real delegations to named managers, including financial limits, bank mandates and escalation rules.
• Local access to accounting records, budgets, contracts and company funds. An outsourced service provider needs defined functions, oversight and evidence.
• A register of where directors and key executives actually participated, including remote attendance.
• Separate French and Mauritius company decisions. Legitimate parent oversight is not permission to fabricate local autonomy.
• A travel/work review before Julien’s French visits: which company is he acting for, what authority will he exercise, and could a workplace be at its disposal?

If France is where management genuinely happens, record that truth and determine the resulting residence/PE obligations. Do not backdate meetings, conceal travel, use scripted nominee approvals or create a Mauritius record that contradicts emails and actual instructions.

A practical board pack

For a proposed acquisition, distribute the commercial rationale, valuation, due-diligence summary, financing, cash forecast, alternatives, conflicts and tax/regulatory advice before the meeting. Directors should be able to question, amend, reject or defer the proposal. A “board pack” sent after the founder signs the contract is weak evidence of prior board decision-making.

During the meeting, establish the actual venue, each participant’s location, lawful quorum and conflicts under the constitution and current law. Record material questions, alternatives and reasons, rather than a transcript or a generic sentence saying “substance was satisfied”. Afterward, implement the approved limits, retain supporting records and review delivery.

Teaching specimen: acquisition resolution and minutes

Company: Lagoon Holdings Ltd · Meeting: actual date and Mauritius venue · Attendance: names and each actual physical/remote location.

Documents considered: dated acquisition paper, valuation range, funding terms, cash forecast, conflicts register and advice. The board records the main alternatives, questions, changes to the proposal and its commercial reasons.

Decision: subject to the specified due diligence and approvals, approve the identified investment within the stated maximum consideration; authorise named officers to execute the identified documents within those limits; require renewed approval for material changes; specify reporting responsibilities and the next review date.

Record: votes, abstentions, conflicts, supporting documents and the actual time of the decision. Complete the company’s required records and approvals. Do not write that all directors attended in Mauritius if some participated from France.

This specimen is an educational structure, not a signed instrument. Check the current Companies Act, the company’s constitution, shareholder agreements, licence conditions and transaction-specific requirements.

For a dividend resolution, establish lawful distributable amounts and the applicable solvency test, shareholder rights, financing covenants, gross amount, entitlement date, payment date, withholding and delegated payment authority. Dividend decisions and intercompany loans are not interchangeable ways to withdraw money. Mauritius Companies Act source; read later amendments.

12. Paying for the children and keeping French houses

A transfer is not automatically new income

Julien transfers €20,000 from his personal Mauritius account to pay a child’s French tuition and living expenses. Identify whether it is ordinary parental maintenance, an outright gift, a genuine loan or a company-paid private expense. Moving already-taxed capital between his own accounts is not another salary or dividend merely because it crosses the border. The source and character still need proof.

Do not pay personal tuition from the company and simply book it as an operating cost. It may be a distribution, remuneration, benefit, loan or disallowable private expense depending on the facts. Use the correct approval, account and tax treatment.

The child’s facts matter separately

For Scenario B’s child who was resident in Mauritius immediately before moving to France solely to study, Article 20(1) can protect qualifying maintenance/education/training payments from sources outside France. Preserve the prior-residence facts, enrolment, purpose and source of funds. Article 20(2) has an additional rule for specified work income; do not replace its conditions with a blanket claim that all student wages are exempt.

For Scenario A’s child who always remained in France, the prior-residence/visit conditions are different. A parent sending money from Mauritius does not manufacture those conditions.

An adult child’s temporary studies in France do not automatically relocate the parents’ home back to France. A spouse and dependent children habitually living in an available French family home is a materially different pattern. Analyse the child’s own residence, French household attachment and any maintenance-income treatment separately.

Maintenance, gifts and inheritance are different

French maintenance deductions depend on the payer’s applicable tax position, the child’s need, proof and household attachment. Do not promise a French deduction to a Mauritius-resident parent solely because the child studies in France. A deduction can also affect the recipient’s French reporting.

Large capital transfers or funding a house purchase can require gift-tax analysis. Under the French territorial rules, consider the donor’s domicile, where assets are situated, and whether a French-resident recipient meets the six-of-ten-year history condition. The income-and-capital treaty is not a gift or inheritance-tax exemption. Maintenance guidance, non-resident gifts.

Houses can remain taxable even when residence moves

French property can retain rental-income tax, property/local taxes, gains exposure and IFI where the applicable net French real-estate base exceeds €1.3 million, subject to the detailed exclusions, debts and treaty analysis. Unfurnished and furnished letting have different rules; social charges and social-security affiliation must be checked for the category. Mauritius residence is not EEA social-security affiliation.

The French non-resident ordinary-income system has a minimum 20%/30% framework and a possible lower average-rate claim; it is not the same as the 12.8% dividend withholding regime. The published 2026 assessment threshold of €29,579 relates to 2025 income. French property guide, non-resident computation.

Where the treaty permits France to tax French rental income, Article 24(1)(a) provides the relevant Mauritius exemption route, with the progression clause still to examine. Do not automatically add Mauritius ordinary tax and credit as though the property income were a dividend.

13. Anti-abuse rules belong in the business decision

A Mauritius company is not a device for relocating profit that French people and assets actually earned. Related-party fees need real services, defensible prices and evidence of benefit. Loans need genuine funding, commercial terms and repayment analysis. Expenses paid to a privileged foreign tax regime can require additional French proof.

For a French-resident individual, CGI article 123 bis can attribute income from certain at-least-10%-held foreign structures in a privileged regime whose assets are predominantly financial. Apply all conditions and safeguards; it is not a blanket rule against every active Mauritius trading subsidiary.

For a French corporate owner, CGI article 209 B addresses certain controlled foreign low-tax operations, with control qualifications, credits and defences relating to real commercial activity. Article 238 A includes a comparison with the tax that would have arisen under ordinary French rules. Even an apparently ordinary foreign headline rate is not a complete answer to that comparison.

These domestic rules sit alongside corporate residence, PE, beneficial ownership, the treaty PPT and other anti-abuse provisions. Tax benefits may be considered in a genuine commercial decision, but paper governance and circular payments cannot substitute for the business facts. Article 123 bis, Article 209 B, Article 238 A.

14. Build the file before the dividend or move

Residence file

Keep a reconciled travel calendar for both tax years, immigration permission, genuinely available homes, tenancy evidence, family/schooling facts, professional duties and a description of investments and control. Update it when circumstances change. Retain the analysis supporting treaty residence and any residence certificates.

Company and payment file

Keep an ownership chart; share register; incorporation and relevant licence documents; current beneficial-owner analysis; commercial rationale; board packs and contemporaneous minutes; delegated authorities; contracts and pricing evidence; financial statements; and the dividend/solvency approvals.

For the French dividend, arrange the appropriate Form 5000 residence certification and Form 5001 procedure with the payer before payment where relief at source is sought. Confirm the actual procedure for that payer and recipient. Keep the gross dividend, withholding certificate, bank receipt and proof of tax paid. If over-withheld, investigate the French refund route and its deadline; do not automatically claim the excess as Mauritius credit. Form 5000, Form 5001.

For underlying credit, obtain the French company’s tax computation, relevant paid-tax evidence and a reconciliation from taxed profits through reserves to the particular distribution. Historic reserves taxed at different rates, losses and tax-exempt profits cannot be assumed to carry 25% underlying tax.

Annual and event-driven review

Reconcile residence, workdays, income character, source, actual remittances, tax credits and currency conversions before the respective returns. Review French foreign-income/accounts reporting, non-resident source-income filings, Mauritius income/CSR/VAT/payroll obligations and applicable regulatory filings. A French-source dividend reaching a Mauritius company and the company’s later distribution are two separate events.

Before share sales, reorganisations, gifts, house purchases or a family move, rerun the analysis. Preserve domestic remedies if authorities disagree. The treaty MAP time limit does not replace a shorter domestic objection deadline.

15. Test your reasoning

Julien spends 235 days in Mauritius but his spouse, children and ongoing founder management remain in France. Is the permit enough?

No. Both domestic systems may claim residence. Apply the treaty’s permanent-home and centre-of-vital-interests tests before moving to later steps. The stated facts strongly support a French claim.

Julien is genuinely Mauritius treaty resident. He works 30 days in France for his French SAS. Does “under 183 days” remove French tax?

No. The short-visit exception also requires a non-French employer and no French PE/fixed base bearing the pay. The employer condition fails in this example.

A Mauritius holding company receives €150,000 after French profits suffered €50,000 corporate tax. Is 3% automatically its best Mauritius treatment?

No. Compare qualifying partial exemption with evidenced direct and underlying foreign credit, including the gross-up and limits. In the stated example the credit route can eliminate residual Mauritius income tax; costs, other charges and eligibility still matter.

The child previously lived in Mauritius and now studies in France. Are tuition support and a €200,000 gift for an apartment the same treaty problem?

No. Article 20 conditions may protect qualifying overseas-source maintenance payments. A capital gift requires a separate gift-tax and reporting analysis. The parents’ residence must also be examined on its own facts.

All minutes say Mauritius, but Julien instructed every important decision from Paris before the meetings. Does the paperwork establish effective management?

No. The records must reflect actual decision-making. Analyse the real management and PE position and correct compliance; do not manufacture evidence.

16. Review status and what is deliberately not a promise

This tax case was checked against the listed primary sources on 20 September 2026. It is original teaching material, not an independently signed-off opinion on Julien’s—or a reader’s—actual liability.

The worked inbound dividend paths expose their assumptions and include underlying tax. The France-bound Mauritius-dividend gross/net credit reconstruction remains a specifically marked practitioner review point; the site does not advertise a universal final effective rate. Future French assessment bands, real exchange rates, immigration eligibility, social-security affiliation, share restructurings and third-country European operations need their own current files.

Correction recorded with this extension: the earlier trial confused the 2026 deletion of Second Schedule Sub-part A item 1 with the domestic-dividend exemption in Sub-part B item 1. The exemption statement has been corrected. Finance Act commencement references were also corrected from section 27 to section 28. The earlier three-chapter edition remains dated 19 September; this case study has its own later review date.