In an instruction dated August 21, 1995 (7 D-6-95) the tax administration modifies, in a manner which is unfavorable to the taxpayer, its administrative commentaries relating to the treatment applicable to transfer of activity agreements to be entered into between companies belonging to the same group. Under the former administrative commentaries, the transfer of activity was subject to a 1% contribution duty whenever it was carried out in favour of one company, by another company who was a shareholder thereof. The analysis of such operations as contributions is now rejected by French Tax Administration. Hence, the taxation of such operations can attain a rate of 14.20%.
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