The "avoir fiscal" (tax credit) is exclusively attached to incomes distributed by a company to its associates as dividends, according to a decision made by the general meeting of its shareholders under the conditions provided by the Law dated July 24, 1966 modified for business companies (French High Court, December 29, 1995).

Accordingly, the benefits deemed to be distributed in view of the tax law by article 111 bis of the French General Tax Code due to the sole fact that the legal person is no longer subject to corporate income tax are not included in the field of application of the "avoir fiscal" (tax credit), neither are they therefore included in the field of application of the "precompte mobilier" (additional corporate income tax due on some distributions of dividends) provided by article 223 sexies-1 of the French General Tax Code.

The French High Court, confirming the meaning of the decision of the Court of Appeal of Lyon (C.A.A. Lyon, June 17, 1992), also gives interesting specifications on this subject. Indeed, this decision does not uses again the restrictive definition retained by the decision of the French High Court dated July 8, 1992 according to which dividends were incomes that had to be periodic and renewable. In his conclusions, the Government commissioner, Mr. Philippe Martin, indeed mentioned that this restrictive definition was likely to exclude from the field of application of the "avoir fiscal" the final liquidating dividend/winding-up profit of a company, whereas the administrative decision in principle allows that the allocations of the liquidating dividends realized under the common law regime regarding a distribution in kind of the asset of a broken up company be giving right to the "avoir fiscal".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be brought about your specific circumstances.

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