French General Tax Code
In forceDistributed income shall not include:
1° Allocations which, for members or shareholders, have the character of repayments of contributions or share premiums. However, a distribution shall only be deemed to be of this nature if all profits and reserves other than the legal reserve have previously been distributed.
Subject to the provisions of 3°, the following shall not be considered as contributions for the application of this provision:
a. Reserves incorporated into capital;
b. Amounts incorporated into capital or reserves (merger or demerger premiums) on the occasion of a merger or demerger of companies or a partial contribution of assets giving rise to the allocation of securities to members under the conditions provided for in 2 of article 115;
c. Amounts incorporated into shareholders' equity on the occasion of a merger or demerger without exchange of securities within the meaning of 3° of II of Article L. 236-3 of the French Commercial Code;
2° Depreciation of all or part of their share capital, interest shares or limited partnerships, carried out by the concessionary companies of the State, départements, communes or other public authorities, when such depreciation is justified by the obsolescence of all or part of the company's assets, in particular through progressive decay or the obligation to hand over concessions to the concession granting authority. The depreciation nature of the operation and the legitimacy of the exemption will be established, in each case, under conditions set by decree (1).
3° Repayments following the liquidation of the company and relating to:
a. Reserves capitalised prior to 1 January 1949;
b. On the amortised capital, up to the fraction having, at the time of amortisation, borne income tax on securities or income tax;
c. On sums incorporated into capital or reserves (merger premiums) on the occasion of a merger prior to 1 January 1949 if and insofar as they have borne, on account of the merger, income tax on securities or the additional tax on capital duty.
4° Sums made available to members where they constitute remuneration for a loan, a service or a function and are validly included in deductible expenses for the assessment of corporation tax.
5° (Repealed)
6° Sums or values allocated to members or shareholders in respect of the redemption of their shares or units. The capital gains regime provided for, depending on the case, in Articles 39 duodecies, 150-0 A or 150 UB is then applicable.
7° The allotment of shares or corporate units made as a result of the capitalisation of reserves;
8° The allotment of shares in open-ended investment companies received as part of a split carried out pursuant to the second paragraph of Articles L. 214-7-4 and L. 214-24-33 of the Monetary and Financial Code.
