What is the impact of the India-France treaty changes on P-notes?

The proposed changes aim to remove the tax advantage previously enjoyed by French investors on Indian equity sales, potentially making P-notes less attractive.

Why are French investors considering other jurisdictions like the Netherlands or Belgium?

These countries continue to offer capital gains tax protection for investors with sub-10% holdings in Indian entities, unlike the proposed changes in the India-France treaty.

How might the revised India-France treaty affect dividend taxation?

The revised treaty is expected to halve the withholding tax on dividends for French companies holding over 10% in an Indian entity but increase it for those holding less than 10%.

Home / Business and Economy / India-France Tax Treaty Shake-up Hits P-Notes

India-France Tax Treaty Shake-up Hits P-Notes

23 Feb

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Summary

Proposed treaty changes may end French investors' equity tax advantage.
P-notes could become less attractive, prompting shift to other nations.
Revised treaty might increase capital gains and dividend taxes for some.

India-France Tax Treaty Shake-up Hits P-Notes

India's proposed revisions to its tax treaty with France are poised to significantly alter the landscape for participatory note (P-note) trading. Previously, French investors benefited from a notable tax advantage when selling Indian equities, a perk that contributed to the popularity of P-notes issued by French banks.

As of February 23, 2026, the anticipated changes would empower India to tax capital gains from equity sales by French investors, thereby diminishing the attractiveness of P-notes. This potential tax liability on French entities and P-note holders could lead investors to seek alternative jurisdictions, such as the Netherlands or Belgium, which continue to offer capital gains tax protection for sub-10% holdings.