The Conseil d'Etat (Supreme Administrative Court) decided on December 29, 1995 that revenues which are deemed to have been distributed under Article 111 bis of the French Tax Code, which concerns profits and reserves, whether they have been capitalised or not, of a company subject to corporate income tax which ceases to be liable, are not subject to the payment of equalisation tax. Indeed, the Court considered that equalisation tax is only due on distributions to which an "avoir fiscal" (dividend tax credit) is attached. However, in accordance with Articles 158 bis and ter of the French Tax Code, the "avoir fiscal" is exclusively attached to income distributed by a company to its shareholders in the form of dividends, in accordance with a decision duly taken at its General Meeting of Shareholders. Consequently, profits deemed, on a tax viewpoint, to have been distributed owing to the sole fact that one legal entity ceases to be subject to corporate income tax, do not fall within the scope of the "avoir fiscal", and by consequence, nor are they subject to equalisation tax. Note that this decision does not make reference to the restrictive definition of dividends laid down in a previous decision by the Conseil d'Etat, dated July 8, 1992, concerning a company's repurchase of its own shares, according to which the income must be periodical and renewable in nature. Indeed, such a condition would have excluded the liquidation surplus distributed upon the dissolution of a company from benefiting from the "avoir fiscal".
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought for your specific circumstances.
For additional information contact Claire Acard on +33 (1) 55 61 10 10 or enter text search: "ARCHIBALD ANDERSEN Profile".
The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar.
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.
EMIR requires counterparties to derivative transactions to provide information on their transactions to trade repositories.
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”
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).