France: Amending Finance Law For 1994

Last Updated: 27 January 1995
Movable property leasing (Article 259A of the French General Tax Code)

Renting of tangible property and means of transport by means of a leasing contract is subject to French VAT when the recipient of the service is established in a EU member state where the lease is assimilated to a delivery and not a hire. This provision applies to rentals outstanding at 1 January 1995, with the exception of those relating to goods imported before 1 January 1993.

Securities exchange and conversion (Article 38-7 of the French General Tax Code)

The scope of the deferral of the taxation of capital gains arising on take-over bid when stock is exchanged for stock (OPE) and debt conversions has been enlarged. In future (for periods beginning on or after 1 January 1994) the following can benefit: share exchanges in respect of shares resulting from share stripping (non-voting preference shares...), conversion of ordinary shares into priority dividend shares (and vice-versa), debt repayment in shares under certain conditions and, normally, certain complex shares, shares with attached share subscription rights (ABSA) and shares with attached bond subscription rights(ABSO), subject to the circumstance that the value of the attached bond subscription rights (BSO) do not exceed a certain limit (for ABSO). Moreover, the limitations against abuses of the former regime are softened.

For the deferal of gain to be applicable to ABSO, the value of the BSO, which is considered as cash, must not exceed 10% of the nominal value of the shares attributed. The gain relating to the amount of the BSO itself is immediately taxable.

In the event of the subsequent sale of the shares received in exchange, the capital gain is calculated according to the original value of the shares exchanged. The length of time during which the shares were held continues to be considered according to the rules previously in force for shares (from the purchase date of the original shares).

Costs for debt issuance

In order to harmonize tax and accounting rules, the new Article 39-1 quater 1° of the French General Tax Code provides that for periods opening with effect from 1 January 1994, if companies want to use the option to amortize their costs for debt issuance, it must be done over the total term of the debt (not more and not less). However, companies have the choice between either a straight amortization, as formerly, or an amortization in proportion to the accrued compensation.

Fixed-interest securities held by a credit institution

For periods opening with effect from 1 January 1994, Article 38 bis B of the French General Tax Code, relating to fixed-interest securities held in an investment portfolio by credit institutions has been modified to take account of the repeal of the rule according to which income from fixed-interest securities is taken into account for tax purposes when cashed (outstanding coupon rule). The coupon accruing up to the purchase is henceforth offset against the difference between the purchase price and the reimbursement value, which is spread over the residual life of the share. The legislation states the method of charging this difference to the periods concerned, for negotiable debt securities and intermarket instruments (on an actuarial basis).

Dividends and provisions neutralization

For periods opening with effect from 1 January 1995, a tax consolidated group will be able to offset against its taxable income dividends received from a company of the group and cashed by another company of the group, nonwithstanding that these companies can not benefit from the participation exemption of the Article 145-1 of the French General Tax Code.

As well, if the parent company is acquired and merged or purchased at an over 95 % capital level by another company subject to corporate income tax, and if a new tax consolidated group takes the place of the former one, the cancellation of provisions following the dissolution of the former tax consolidated group can be neutralized if concerned companies belong to the new tax consolidated group.

Mergers: portfolio securities

For merger operations effective during periods beginning on or after 1 January 1994, portfolio securities of which the gain upon sale is excluded from the long term capital gains/losses regime (i.e. most of portfolio securities), are nevertheless assimilated to fixed assets, which allows them to be held at their real value whilst maintaining the deferral of the liability under Article 210 A of the French General Tax Code.

Participation exemption : merger and acquisition :

Article 145 of the French General Tax Code provides that securities held for long-term purposes (titres de participation) benefitting from the participation exemption must, if not subscribed at their issuance, be held for at least two years. Any sale before these two years leads to a retroactive cancellation of the participation exemption.

As of the current date, the tax exemption will no longer be cancelled in the following three cases : if the shares are contributed as capital under the special merger regime, if they are exchanged by the partner of the purchased company in a merger, a partial merger or a take-over bid or if they are canceled subsequent to a merger of parent and subsidiary companies benefitting from the regime of Article 210 A of the French Tax Code.

Adjustments: specific group obligations

Article 1668 bis of the French General Tax Code which provides that a group parent company must immediately settle tax arising on adjustments accepted by a group company and must file a corrected tax declaration is repealed. Groups are thus subject to common law in this respect.

Requests for prior rulings

Article 1649 nonies of the French General Tax Code relating to requests for prior rulings has been supplemented. In future, all demands for prior tax rulings which are conditional on the application of particular tax regimes must be submitted before the transaction is carried out.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. For additional information contact Claire Acard on +33 (1) 55 61 10 10. The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar.
Copyright Mondaq Ltd 1995 Tel +44 171 820 7733.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions