Taxpayers residing in France may benefit, pursuant to Article 92 B II of the French Tax Code, from deferred taxation on capital gains realized from the contribution or exchange of shares. Taxpayers qualify for this special regime on the condition that they file an annual statement reporting the capital gains benefiting from deferred taxation and that they declare each year on their individual income tax return the cumulated amount of capital gains benefiting from deferred taxation. A recent ministerial reply (Dubernard, AN 1st April 1996, p. 1756, no.29550) states that taxpayers do not lose this benefit of deferred taxation if they become a resident abroad for tax purposes. They are, however, obliged to declare their French source income and may be required by the French tax authorities to appoint a representative in France authorized to receive all correspondence relating to the tax basis, the collection of taxes or tax litigation.

The content of this article is intended to provide a French guide to the subject matter. Specialist advice should be sought for your specific circumstances.

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