A Q&A guide to tax on finance transactions in France.
This Q&A provides a high level overview of finance tax in France and focuses on corporate lending and borrowing (including withholding tax requirements), bond issues, plant and machinery leasing, taxation of the borrower and lender when restructuring debt, and securitisations.
To compare answers across multiple jurisdictions, visit the Tax on corporate lending and bond issues Country Q&A tool.
The Q&A is part of the PLC multi-jurisdictional guide to tax on finance transactions. For a full list of jurisdictional Q&As visit www.practicallaw.com/taxontransactions-mjg.
The Direction Générale des Finances Publiques (DGFIP) heads the various bodies responsible for the assessment, collection and control of taxes in France.
The general director of DGFIP is assisted by the directors of:
Taxation.
Public management.
Management of the network and resources.
Under the authority of the general director and the director responsible for taxation, various national, regional and departmental authorities are responsible for assessing, collecting and controlling taxes. These include the:
Large Business Directorate (Direction des Grandes Entreprises), which centralises taxation of large companies or groups of companies (that is, mainly companies whose total gross assets value or turnover exceeds EUR400 million or a member of a tax consolidated group where one company of the group meets that test) at the national level (as at 1 March 2012, US$1 was about EUR 0.7).
National and International Audit Directorate (Direction des Vérifications Nationales et Internationales), which is responsible for the tax audits of large companies or groups of companies on a national level.
Tax Legislation Directorate (Direction de la Législation Fiscale) which is in charge of drafting legislation and regulations, as well as issuing guidelines on the tax authorities' interpretation of tax law.
A company does not need to apply for tax clearance from the tax authorities before completing a finance transaction. The company usually completes the transaction and applies the tax treatment it deems appropriate.
However, the tax treatment of a particular transaction can be reviewed and challenged by the tax authorities within the statute of limitations. The statute of limitations for most taxes expires at the end of the third calendar year after the year of taxation. However, depending on the tax, this can be extended in certain circumstances.
To be certain about the correct tax treatment for a particular transaction, a company can make an application for a general ruling (rescrit général) under Article L 80 B-1° of the Tax Procedure Code. Under this procedure, a company can ask the tax authorities for their position on the interpretation of a particular tax law or its application on the specific facts of the transaction. A company must disclose all the information necessary for the tax authorities to take a position.
The tax authorities issue a written position which is binding, provided the facts are accurate and any conditions are complied with by the parties.
The tax authorities must issue a position within three months. If no written position is issued within this time, the tax authorities are considered as not having taken a position, leaving the company with uncertainty.
A company can ask for a second opinion if it believes the position taken by the tax authorities incorrectly applies the law to the facts. The right to ask for a second opinion should be exercised within two months of the position being issued. A dedicated commission within the tax administration reviews the request within three months.
For certain tax issues (for example, ascertaining whether a permanent establishment exists in France, or the benefit of a research and development (R&D) tax credit), a consultation procedure is expressly provided for by law (specific ruling (rescrit spécifique)). The time frame for the tax authorities to issue their position is three months. Importantly, one of the main differences between the specific rulings and the general rulings is that concerning specific rulings, the absence of an issued written position is considered as an implicit agreement from the tax authorities.
The application for a ruling is filed with the tax authority responsible for assessing the tax of the company concerned. However, a company can directly file the application with the Tax Legislation Directorate if it involves a difficult interpretation of tax law.
There is no legal obligation for the taxpayer or its advisers to disclose finance transactions. However, the adoption of a law providing for a disclosure obligation similar to the procedure existing in the UK and the US was considered in 2006 and again at the end of 2008.
Interest derived from receivables, loans and any other debt instrument is included as taxable income and is subject to corporation tax at the standard rate. Interest is included in the company's taxable income when accrued, regardless of the effective date of payment.
Financial expenses are allowed as deductions from taxable income, subject to certain limitations (see Question 5).
The standard rate of corporation tax is 33.33%. However:
If turnover is lower than EUR250 million and:
corporation tax is lower than EUR763,000, the rate is 33.33%;
corporation tax is higher than EUR763,000, such companies will be subject to an additional surcharge of 3.3% on their tax resulting in a rate of 34.433%.
A reduced rate of 15% may apply to small and medium-size companies on the first EUR38,120 of profits and at the standard rate on any excess.
If turnover is larger than EUR250 million and:
corporation tax is lower than EUR763,000, the tax rate is 35%;
the band of basic corporation tax is above EUR763,000, the tax rate is 36.10%.
Companies with a turnover exceeding EUR250 million before tax are liable to a 5% temporary corporation tax surtax. Within tax consolidated groups, the threshold of EUR250 million is assessed by adding turnovers of each of the member companies. The 5% surtax will be calculated on the amount of corporate tax due, regardless of the applicable rate (33.33% standard rate or reduced rates), before deducting tax credits and before additional social surtax of 3.3%.
This surtax will be paid once a year, together with the balance of the corporate tax due. It will apply for two financial years and for the first time on the corporation tax due for the year ended 31 December 2011.
Income derived from loans is exempt from VAT (Article 261 C, Tax Code). Therefore, the entity receiving those amounts may have its general percentage of VAT recovery rights reduced.
A company's loan expenses are generally tax deductible. Interest on loans is deductible for the borrower in the year it is accrued, even if it has not yet been paid.
The costs of issuing loans are also tax deductible in the year they are incurred. However, if the company chooses, the costs can be deducted over the duration of the loan (Article 39-1-1° quarter, Tax Code). This choice is formalised by the accounting treatment applied to the costs, and is binding on the company for all loans it issues during a two-year period.
The annual deduction is determined according to the loan repayment terms or by equal portion on a linear basis if this does not lead to significantly different results.
Repayment premiums or any remuneration in addition to interest, which exceed 10% of the loan proceeds, are deductible over the duration of the loan. The annual amount is determined on an actuarial basis.
Expenses relating to loans issued by a company are generally deductible provided the loans are issued in compliance with the corporate benefit of the company. In making this determination, the tax authorities mainly consider the ability of the company to service the debt without jeopardising its business activities.
In addition to this general principle, there are other specific limitations which mainly relate to loans concluded between related parties, or, in certain cases, loans guaranteed by related parties.
Interest rates on loans to shareholders and related parties must not exceed a defined rate (3.99% for financial year 2011). However, as regards interest paid to related parties, the borrower can show that the interest rate applied is at arm's length (that is, a rate that a third-party lender would claim for loans with similar terms and conditions) (Articles 39-1-3° and 212, Tax Code). The defined rate corresponds to the average rate applied by financial institutions on loans to companies with a floating rate and having a maturity of at least two years.
Two companies qualify as related parties when:
One company has a majority shareholding in the other company (either directly or through an intermediary) or has the effective control over that company.
Both companies are placed under the control of a third company which has a majority shareholding in or control over both companies.
There are limits to the tax deductibility of interest on related party loans if the borrower is thin capitalised (Article 212, Tax Code). Limits apply if all of the following three thresholds are met in a year:
The related party loan(s) issued by the borrowing entity exceeds a debt to equity ratio of 1.5 to 1.
The annual interest incurred exceeds 25% of the before-tax profit of the borrower (after some adjustments).
The annual interest incurred exceeds the annual interest income received under related party loans.
If all of these thresholds are met, the portion of interest in excess of the higher of the above thresholds is not tax deductible, unless the amount of excess interest is less than EUR150,000. The interest which is disallowed can be carried forward as a deduction in the following years under certain conditions.
The scope of the anti thin-capitalisation rules applicable to intragroup loans has been extended by the Finance Bill for 2011 to loans granted by a third party entity but guaranteed by a related company.
Loans granted to a French entity by third-party lenders now fall within the scope of the thin capitalisation rules if they are guaranteed by a company related to the French borrower or by a third party whose commitment is itself secured by a company related to the French borrower.
However, the legislation also contains a safe harbour clause for loans resulting from a public offering of bonds. This exception also covers bonds offered to the public and issued in accordance with foreign legislation equivalent to the provisions of Article L411-1 of the French Monetary and Financial Code (Code Monétaire et Financier). Conversely, financings that give rise to private placements will fall within the scope of the new rules.
Another exception applies when the guarantee granted by the related party exclusively consists of a pledge over the shares of the borrowing company or over receivables held over the borrowing company, or a pledge over the shares of an intermediate company that directly or indirectly holds the shares of the borrowing company. However, this latter exception applies only if the holder of the pledged shares and the borrowing company are members of the same French tax consolidated group.
The last exemption covers loans contracted for purposes of refinancing an existing debt that must be reimbursed as a result of a change of control of the borrower. The refinancing loan is exempt up to the principal amount of the existing debt that is being reimbursed and any interest falling due.
The new legislation is effective for financial years closed as of 31 December, 2010. However, it contains a grandfathering provision that covers loans contracted before 1 January 2011, for the financing or refinancing of an acquisition of shares.
Companies that have chosen the tax consolidated group regime may be subject to limits on the deductibility of interest paid on loans, regardless of whether the loan is with a related party or third party (Article 223 B, Tax Code).
This provision, commonly called Amendement Charasse, provides that if a company sells the shares in a subsidiary to another company which is under the same control, and the acquiring company subsequently forms a tax consolidated group with the acquired subsidiary (or both companies subsequently belong to a same tax consolidated group), then a portion of the interest incurred by all the companies belonging to the tax consolidated group is not tax deductible.
The non-tax deductible portion is determined by the amount of consideration paid for the shares in the subsidiary and the amount of debt within the tax consolidated group. These limits on deductibility last for eight years after the transaction and only while the acquiring company and the transferred subsidiary belong to the same tax consolidated group. However, various exemptions to this limitation apply (Article 223 B, Tax Code).
As from fiscal years beginning on or after 1 January 2012, a new anti-abuse limitation for the deduction of financial charges also applies (Article 209, IX Tax Code). The new measure is designed to allow full deductibility of acquisition-related interest expense only in cases where the shareholding is actually managed from France.
The burden of proof is on the taxpayer to demonstrate that:
Decisions on share-related transactions are made in France.
The control of the subsidiary’s management is effectively undertaken from France.
If these conditions are not fulfilled, a portion of the interest expenses relating to the acquisition would be disallowed each year in an amount corresponding to the ratio between the acquisition price and the average of the overall company’s indebtedness for the fiscal year concerned. This applies until the end of the eighth fiscal year following the acquisition (that is, over a maximum nine-year period).
This provision is applicable to future acquisitions of shares, as well as previous acquisitions.
The above evidence must be provided for the financial years covering the 12-month period following the acquisition (shares acquired after 1 January 2012), or the first financial year opened after 1 January 2012 (shares held on 31 December 2011).
The measure includes exceptions and would not apply to situations in which:
The value of the shares held by the company does not exceed EUR1 million.
The French company demonstrates that the indebtedness ratio of the group exceeds, or at least equals, its own.
The acquisition of shares was not funded by loans (the borrower being the acquiring company or another company of the tax consolidated group).
Transfer of a loan receivable at nominal value does not result in taxation for the lender.
The borrower also does not incur tax provided the required legal formalities are complied with when the receivable is transferred from the previous to the new lender.
Transfer of a loan receivable is usually not subject to transfer tax or stamp duty. If the transfer deed is registered with the tax authorities (which is voluntary), a fixed duty of EUR125 applies.
In a transfer of a receivable secured by a mortgage, the changes in the mortgage registry give rise to a registration tax.
Amounts received as consideration for the transfer of receivables are exempt from VAT and excluded from the possibility to elect for VAT. Specific regulations allow mitigation of the consequences of the transfer on the calculation of the input VAT recovery ratio.
Interest payments made by French companies to a resident in a co-operative country are not subject to withholding tax. In contrast, interest paid on a bank account located in a non-co-operative country or territory (NCCT), whatever the place of residence of the effective beneficiary of the revenue, is now subject to a 50% withholding tax. However this 50% withholding tax does not apply if it is proved that the main purpose and consequence of the transaction is not to transfer profits to an NCCT.
A jurisdiction is considered an NCCT and included in a list to be issued by the Ministry of Finance if it meets all the following criteria:
It is not an EU member state.
It has been investigated by the Organisation for Economic Co-operation and Development (OECD) Global Forum on Transparency and Exchange of Information for tax purposes.
As at 1 January 2010, it has not signed at least 12 administrative assistance treaties, enabling the exchange of information necessary for enforcing the tax legislation of the parties.
As at 1 January 2010 it has not concluded an administrative assistance treaty with France.
As of 14 April 2011, French tax authorities published the following NCCT list for 2011 (although the list should be updated every year, no update has currently been issued for 2012):
Anguilla.
Belize.
Brunei.
Cook Islands.
Costa Rica.
Dominica.
Grenada.
Guatemala.
Liberia.
Marshall Islands.
Montserrat.
Nauru.
Niue.
Oman.
Panama.
The Philippines.
Turks-and-Caicos Islands.
Saint-Vincent and Grenadines.
For a comparative summary of withholding tax on interest, see table, Withholding tax requirement on interest on corporate debt, and the key exemptions (www.practicallaw.com/3-502-0416), in this multi-jurisdictional guide.
Payments made by the borrower to the guarantor as consideration for granting a guarantee are usually tax deductible as expenses incurred in the course of business, provided the guarantee was a condition of the lender for granting the loan, and was made at arm's length.
Payments made by a guarantor under a guarantee further to the default of the borrower are usually tax deductible as expenses incurred in the course of business, provided the granting of the guarantee was performed in the interest of the company and at arm's length.
The provision of guarantees is a VAT-exempt activity and it is not possible to elect for VAT for commissions received by a guarantor.
Bonds are generally treated as standard corporate loans for corporate taxation purposes. However, some specific rules apply.
Interest is deductible under standard tax rules (see Question 5). Payments to bondholders other than interest (particularly, repayment premiums) are deductible on an actuarial basis over the duration of the bond if they exceed 10% of the amount received at issuance.
Interest received is taxed under standard tax rules (see Question 4). Repayment premiums are taxable over the duration of the bond, on an actuarial basis, when both the:
Discount or premium exceeds 10% of the bond's purchase price.
Average price at issuance does not exceed 90% of the redemption price.
Otherwise, repayment premiums are taxable on reception.
Unless paid to an NCCT, interest on bonds is exempt from withholding tax (see Question 7).
Conversion of bonds into shares or redemption of bonds into shares does not crystallise any capital gain from a tax perspective and does not trigger any immediate taxation, provided there is no cash payment to bondholders on the conversion or redemption.
Capital gains only crystallise and are taxed on the subsequent disposal of shares by the French company that received the shares on the conversion or redemption of bonds. Capital gains are then calculated based on the tax value of the bonds in the books of the bondholder.
The issue of a bond does not trigger any stamp duty or similar tax.
The transfer of a bond is not subject to any registration duty or transfer tax. If the transfer agreement is filed with the tax authorities (which is voluntary), a fixed registration duty of EUR125 applies.
Operations relating to bonds are exempt from VAT. Election for VAT is available, under conditions, to certain entities and in relation to certain services.
Not applicable.
Capital allowances can only be claimed by the lessor since it is the legal owner of the plant or machinery being leased.
The lessor can either:
Elect to amortise the leased plant or machinery over the lease term. This election is irrevocable.
Amortise the plant or machinery under the standard method, for a period corresponding to the asset's useful life under a linear or a declining balance method (this method can only be used for certain assets, under French accounting rules (see Question 13)). However, the lessor can deduct a portion of its taxable income in anticipation of the loss that will be realised when the lessee exercises the option to purchase the leased asset.
The lessee cannot claim capital allowances over leased plant and machinery. However, it can normally deduct lease payments from its taxable income (see Question 15).
The rate of capital allowances depends on the nature of the assets and the depreciation method used:
Linear method. The depreciation rate is based solely on the foreseeable useful life of the plant or machinery. For example, the annual rate of capital allowance is 25% for an asset with a useful life of four years.
Declining balance method. The depreciation rate is the linear rate multiplied by a coefficient. For assets acquired as from 1 January 2010, this coefficient is:
1.25 when the asset's useful life is from three years up to four years;
1.75 when the asset's useful life is from five years up to six years;
2.25 when the asset's useful life is more than six years.
Only certain assets are eligible for the declining balance method (for example, handling and certain office equipment, security equipment and industrial manufacturing equipment).
Specific rules apply to calculate tax-deductible allowances where the lessor is a partnership or an individual (Article 39 C, Tax Code).
There are no special applicable rules, but various anti-avoidance provisions may apply. In particular, transfer pricing provisions can apply on the payments made between the lessee and the French lessor (Article 57, Tax Code).
In the EU, the leasing of tangible movable goods is taxable in the country where the recipient is established.
Rents received by the lessor are included in its taxable income and are subject to corporation tax at the standard rate (see Question 4, Corporation tax).
Rental payments made by the lessee are deductible under the standard rules, that is, rental payments must correspond to an asset used by the lessee for the purpose of its business and comply with the arm's length principle (particularly if the lessor and the lessee are part of the same group).
Lease payments on real estate are usually tax deductible for the lessee, but for agreements entered into after 1 January 1996 if the exercise price of the call option is lower than the cost of the land borne by the lessor, a portion of the payments is not tax deductible.
In addition, on the exercise of the call option, a portion of the lease payments made over the duration of the lease is added back to the taxable income of the lessee, so that it would eventually be placed in the same situation as if it had acquired the real estate directly.
The lease of movable assets is fully subject to VAT. The lease of immovable assets may be exempt from VAT except if the lessor duly elects for the payment of VAT.
VAT on rentals payments can be deducted as input VAT under the usual conditions except for some specific assets (for example, vehicles for the transport of persons).
A ruling or clearance is neither necessary nor common, but can be obtained for large transactions or specific situations.
Interest is deductible or taxable on an accrued basis (as opposed to a cash basis) for corporation tax purposes. Accordingly, the non-payment or deferral of payment of the interest does not affect the tax treatment of the borrower and lender, provided no provision allowance is booked.
If a provision allowance is booked at the level of the lender (corresponding to the unpaid interest and/or the principal of the loan), it is tax deductible at the level of the lender, under the general requirements applicable to provisions. In particular, the loss covered by the provision must be rendered likely (not merely possible) by events existing at the end of the relevant year and the amount must be assessed with sufficient accuracy.
Written off or released (wholly or partly)?
Replaced by shares in the borrower (debt for equity swap)?
At the level of the lender, the waiver of a debt is tax deductible if the following two conditions are met:
The transaction must be considered as a normal act of management (in particular, it must be in the interests of the lender granting the waiver, and not the group's interest as a whole).
The waiver must be of a commercial nature (that is, granted for reasons involving the business relationships of both companies) or of a financial nature (waiver of debt granted by a parent company to its subsidiary).
In the second case, the waiver is fully deductible up to the amount of the negative net equity of the borrower benefiting from the waiver, and for the remaining amount it is only deductible for the portion corresponding to the percentage of share capital of the borrower held by minority shareholders.
At the level of the borrower, the waiver of debt normally triggers a taxable profit equal to the nominal value of the debt waived. However, in a financial waiver that is not deductible at the level of the lender, this waiver may not be taxable at the level of the borrower provided that it undertakes to increase its share capital for an equivalent amount by the end of the second financial year following the waiver.
The replacement of a debt by shares in the borrower is structured as a capitalisation of a loan.
Capitalisation of a loan generally has no corporation tax implications either at the level of the borrower or the lender (provided however that the acquisition price of the loan is not lower than its nominal value). A non-significant fixed registration duty is payable on the capitalisation, being EUR375, or EUR500 if the share capital of the borrower is more than EUR225,000.
In a securitisation, the originator transfers assets (generally receivables) to a securitisation note-issuing special purpose vehicle (SPV). The issuer, in turn, issues securities to investors.
French law contains a specific regime for securitising receivables, using as an SPV, a French mutual debt fund, the FCT (Fonds Commun de Titrisation). The FCT is a co-ownership vehicle which does not have separate legal personality. The FCT is tax transparent for corporation tax purposes.
The use of a non-resident SPV for securitisation is possible but it may raise certain French tax issues, such as:
The application of rules preventing the transfer of assets outside France to an entity managing such assets to the benefit of the transferor (Article 238bis-0 I, Tax Code).
The existence of a French permanent establishment of the SPV (or risk that the effective seat of management of the SPV is considered to be in France).
Withholding taxes.
The FCT itself is not subject to corporation tax.
Entities subject to French corporation tax that hold units in the FCT must include in their taxable income:
Earnings from units.
Any gain on the distribution of a liquidation surplus.
Any capital gain on the disposal of units.
In addition, they must carry out a mark-to-market valuation of the FCT units at the end of each fiscal year, and include variances in valuation in the taxable income of the fiscal year (Article 209-0 A, Tax Code).
No French withholding tax is due on the transfer of the receivables to an FCT or on interest paid by an FCT to foreign unit holders (assuming that interest is not paid by the FCT to a resident in a NCCT).
There are no registration duties on the transfer of the receivables or on the sale of FCT units. However, a fixed fee of EUR125 is due if the agreement is voluntarily filed with the tax authorities.
A 2.5% registration duty is due on the payment of the liquidation surplus of the FCT (1.1% before 1 January 2012). However, if there is a single beneficiary of the liquidation surplus, there is a strong argument that the registration duty does not apply.
Transactions relating to the transfer of debts and to the management of debts transferred are exempt from VAT and excluded from the possibility to elect for VAT. Specific regulations allow mitigation of the consequences of the transfer on the calculation of the input VAT recovery ratio.
The tax authorities consider that the part of the service which relates to debt collection is subject to VAT.
The tax rules for VAT on the underlying commercial claims remain unchanged after the transfer of the debts (that is, VAT on services is payable at the date of the payment and VAT on goods is payable at the date of the transfer of ownership). The person liable of the payment of VAT to the tax authorities remains the initial supplier which has transferred its debts. Specific guidelines provide for the modalities of the recovery of VAT on bad debts.
The scope and rate of registration duties on transfers of shares has been first modified in the 2012 budget law, with the changes coming into effect on 1 January 2012. Under the new rules, different rates apply, depending on the amount of the transaction:
3% below EUR200,000.
0.5% between EUR200,000 and EUR500 million.
0.25% over EUR500 million.
Under the amended 2012 budget law, as from 1 August 2012 the rate of registration duties on the transfer of shares will be 0.1% regardless of the transaction amount.
Registration duties are due on a purchase of shares issued by a French company where the purchase is documented in writing (which could potentially include electronic communications such as Bloomberg messaging). This tax can apply no matter where the trade is executed or where the buyer and seller are located.
As from 1 August 2012, the following transactions will be exempted from registration duties:
A company’s purchase of its own shares intended to be sold to its employees (as from 1 August 2012, only for resale within the framework of a company savings plan (PEE)).
Transactions within the framework of a capital increase or a collective insolvency proceeding.
Transactions within the framework of operations benefitting from the merger favourable regime (as from 1 August 2012, transactions benefitting from Article 210 A of the Tax Code, and not only Article 210 B, are concerned).
Transactions between members of the same tax consolidated group (or, as from 1 August, 2012, between members of a group as defined by the Commercial Code).
As from 1 August 2012, transactions subject to the financial transactions tax.
The government has approved three separate taxes, which will apply as from 1 August 2012:
A tax of 0.1% on the acquisition of listed shares of French companies where there is a transfer of legal title to the shares (as defined under the Monetary and Financial Code), the shares are listed on a regulated market (in France or in another country) and the shares are issued by a company headquartered in France whose market capitalisation exceeds EUR1 billion as at 1 January of the tax year. A list of affected companies will be published. The financial transactions tax, however, will not apply to the following:
purchases made through an issuance of equity securities;
intragroup transfers;
acquisitions subject to the special regime for mergers and similar transactions;
acquisitions made under employee savings schemes;
acquisitions of bonds exchangeable for, or convertible into, shares. However, the tax will apply at the time of conversion or exchange of the bonds.
The financial transactions tax will be based on the value of the acquired shares and will be due by the operator providing the investment services, but collected and paid to the Treasury by the central security depositories (for example, Euroclear France). Account holders will have to provide information to central depositories so they can properly fulfill their obligations. Stringent penalties will apply for failure to comply (that is, an additional 20% to 40% of the tax due will be imposed).
A 0.01% tax will apply to French resident companies carrying out high frequency trading of equity securities for their own account. High frequency transactions are defined as orders carried out on a regular basis using an automated processing mechanism, characterized by the sending, modification or cancellation of successive orders on a given security within a very short period of time (the definition of short period will be defined by a decree). The tax will be due as soon as the rate of cancellation or modification of orders within the scope of the tax exceeds a certain threshold on a single stock exchange trading day on the amount of the aggregate value indicated in the orders canceled or changed.
Specific legislation applies to CDS on sovereign default risk purchased by a company taxable in France, save where the CDS:
hedges a long position;
is purchased in the context of market making.
The tax is payable at 0.01% of the notional amount of the CDS. It is due on the entering into of the agreement and paid to the Treasury at the time of filing of the VAT form.
The European Parliament has voted a regulation prohibiting the sales of CDS on sovereign default risk. This regulation will be in force in November 2012. As a result, this tax will become null and void.
For fiscal years opened as from 1 January 2011, the taxable portion on long term capital gains benefitting from participation exemption in France has been increased to 10% (5% for fiscal years ending before 1 January 2011) of the net capital gains, deemed to be costs and expenses. This lump sum is taxed at the standard rate of corporate income tax. As a result, capital gains derived from participation shares are subject to an effective corporation tax rate of a maximum 3.61%.
T +33 1 55 61 53 66
E egenot@taj.fr
W www.taj.fr
Qualified. France, 1998; member of the Hauts-de-Seine Bar
Areas of practice. Head of the financial services tax practice.
Recent transactions
T +33 1 40 88 72 63
E abrunetto@taj.fr
W www.taj.fr
Qualified. France, 2006; member of the Hauts-de-Seine Bar
Areas of practice. Financial services; tax.
Recent transactions
T +33 1 55 61 66 69
E wstemmer@taj.fr
W www.taj.fr
Qualified. France, 2007; member of the Hauts-de-Seine Bar
Areas of practice. Financial services; VAT partner.
Recent transactions
