Hello,
I am seeking clarification on the Double Taxation Agreement between Australia and France, and more precisely Article 13 (Alienation of Property) Paragraph 1, which states:
- 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.
This is a standard DTA and the AU-US DTA has the same provisions for example.
My interpretation is that a tax resident of Australia selling an investment property in France will be taxed on the profit / capital gains in France.
Now, where I am not 100% clear is whether the seller is taxed ONLY in France and fully exempted of CGT in Australia, since this agreement does not mention any taxation in the resident State,
OR is the seller taxed first in France on their CGT and getting a Foreign Tax Credit from this that offsets a CGT to be paid in Australia?
I don't think the latter is correct since there is nothing to that effect in the Double Taxation Agreement, but would like to have certainty so this can be budgeted correctly.
Thanking you in advance.
Reference: https://www.austlii.edu.au/au/other/dfat/treaties/2009/13.html
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