France: Foreign exchange losses related to dividends under participation exemption are fully deductible (Supreme Court decision)
Deduction is not limited to taxable portion of dividends.
The Supreme Court on July 25, 2025, held that foreign exchange losses related to dividends under the participation exemption regime are fully deductible.
The court overturned the Court of Appeals' decision limiting the foreign exchange loss deduction to 5%, aligning it with the taxable portion of dividends.
The court clarified that, under French tax law, foreign exchange gains and losses are accounted for at their value on the payment date, allowing the full deduction of foreign exchange losses irrespective of the 95% dividend exemption.
For further information, contact a KPMG tax professional in France:
Marie-Pierre Hôo | mhoo@kpmgavocats.fr