Law & Numbers - News Tax

TAX NEWS 01 2012

09.02.2012 (France)

1/ Companies 2/ Individuals 3/ Tax Audit

1/ Companies

1 - CIT - Exceptional contribution (Amended FL 4)

Companies whose turnover is higher than 250 Million Euros, will be subject to an exceptional contribution equal to 5% of the CIT due.
This measure applies to financial years ending between December 31st, 2011 and December 30th, 2013.

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2 - CIT- Deduction of interest borne for the acquisition of controlling shares (Amended FL 4)
Interests borne for the acquisition of controlling shares are tax deductible only when they provide effective control over the target company.
This provision applies for financial years opened as of January 1st, 2012.

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3 - CIT - Disposal of qualified controlling shares (Amended FL 4)

A differed taxation regime for capital gain and loss applied on the disposal of qualified controlling shares held for less than two years and sold to an affiliate company. This differed taxation is from now restricted to capital losses and no longer applies to capital gains.
Entering into force for financial years as from January 1st, 2012.

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4 - CIT - Patents rights (FL 2012)

When patents rights are licensed to an affiliate company, the licensed company is allowed to fully deduct the royalties paid only when it demonstrates that the license is effective and profitable. In case of sublicensing, the licensed company is subject to a 15% CIT on the difference between the royalties received from the sub licensed company and the royalties paid to the licensing company.
Entering into force for financial years as of October 13th, 2011.

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5- CIT - R&D driven SME called “JEI” (Amended FL 4)

JEI benefited from a full CIT exemption for 36 months and a 50% CIT exemption for an additional 24 month period. As from now on, JEI benefit only from a 12 month 100% CIT exemption and an additional 50% CIT exemption for another 12 month period.

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6 - CIT - Abolition of the 1/3 tax allowance on the taxable result of French overseas companies (FL2012)

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7- Fat tax on sugar added beverages (FL2012)

As from January, 1st, 2012, beverages containing added sugar and/or sweetener, are subject to a tax equal to 7.16 per hectoliter. Infant nutrition products and medical nutrition products are excluded.

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8 - Abolition of the 2% tax on hotels nights

As from November 1st, 2011, the 2% tax on hotels nights is retroactively abolished.

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9- VAT - Increase of the reduced rate (Amended FL4)

The reduced rate increases from 5,5% to 7 % except for some products and services (foods, school cafeteria equipments for disabled etc.)

10 - REGISTRATION DUTIES - Disposal of shares (FL2012)

Proportional tax of 3% capped at 5000 applicable on the sale price of the shares is replaced by tax brackets: - 3 % on the fraction of the taxable basis below 200 000 ;
- 0,5 % on the fraction between 200 000 and 500mio;
- 0,25 % above 500mio.

Moreover, the 5 000 cap is abolished.


2/ Individuals

11- IT - Creation of exceptional contribution on high incomes (FL 2012)

An exceptional contribution on high incomes has been set up. This contribution computed on the fiscal reference revenue is equal to:

- 3 % on the fraction of the fiscal reference revenue between 250 000 and 500 000 (singles) or between 500 000 and 1 000 000 (couples or PACS partners filing a joint tax return )
- 4 % on the fraction of the fiscal reference revenue above respectively 500 000 and 1 000 000 .

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12 - IT - Freeze of the income tax brackets (LFR4)

Income tax brackets are frozen for 2011 revenues and further years until the public deficit will be under 3% of the GDP.
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13 - Rise of the final flat taxation rate on dividend and interests (LFR4)

The final flat taxation rate on dividend rises from 19% 21 %. The rate on financial products providing fixed revenues rises from 19% to 24%.

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14 - IT - 15% reduction of tax rebates/incentives and overall limitation (LF 2012)

Global 15% reduction on the tax rebates/incentives for the taxation of 2012 revenues excepted on:
- tax advantage for expenses for employees at home
- tax credit for child care
- tax reduction for investments in social rental building

Moreover, the global ceiling applicable to tax niches is lowered to 18 000 plus 4% of the taxable income.

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15 - CAPITAL GAIN - Disposal of shares (FL 2012)

Abolition of the full tax exemption after a 8 year holding period and replacement by a differed taxation when 80% of the gain is reinvested into the equity of an operational company.

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16- IT - Subscription to SME capital (Amended FL4)

The tax credit for equity infusion in a SME is now limited to infusion within SMA when incorporated, starting-up or expanding.

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17 - REAL ESTATE INVESTMENT - The tax advantage for rental investments called “Scellier regime” is reduced (FL 2012)
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18 - REGISTRATION DUTIES - Disposal of shares (FL2012)

Proportional tax of 3% capped at 5000 applicable on the sale price of the shares is replaced by tax brackets:
- 3 % on the fraction of the taxable basis below 200 000 ;
- 0,5 % on the fraction between 200 000 and 500mio;
- 0,25 % above 500mio.

Moreover, the 5 000 cap is abolished.


3/ Tax Audit

19 - FIGHT AGAINST TAX EVASION - Status of limitation /Disclosing of foreign accounts and assets (Amended FL4)

The status of limitation is expanded to 10 years when the taxpayer did not comply with his disclosure obligations i.e. foreign accounts, life insurances subscribed abroad, as provided by article L 169 du LPF. Before, this expanded status of limitation only applied to countries which did not conclude with France an agreement allowing mutual administrative assistance and access to bank information aiming at fighting against tax fraud.

This provision relates to disclosure obligations made as from January 1st, 2009.









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