French General Tax Code
In forceI. - Taxation of capital gains derived from the sale for valuable consideration or redemption of shares in an open-ended investment company or units in a mutual fund, as well as from the dissolution of such entities, may be deferred under the conditions set out in II.
II. - The benefit of deferred taxation is subject to compliance with the following conditions.
A. - The company or fund referred to in I belongs to the "money market" class or the "short-term money market" class. This classification is evidenced by the documents referred to in articles L. 214-23 and L. 214-24-62 du code monétaire et financier.
B. - The taxpayer shall pay the sale or redemption price or the amount of the sums allocated to him on dissolution, net of the social security deductions due in respect of these transactions, within one month of the date of this event, into a share savings plan intended for the financing of small and medium-sized enterprises and intermediate-sized enterprises, defined in Article L. 221-32-1 du même code.
When the payment into such a plan relates to only a fraction of the price or sums, the deferral of taxation applies only in respect of the corresponding share of the capital gain.
C. - The taxpayer requests the benefit of this deferral and mentions the amount of the capital gain thus placed in deferral on the declaration provided for in article 170 of the present code.
III. - Failure to comply with any of the conditions set out in II of this article shall result in income tax becoming payable immediately, without prejudice to the late payment interest provided for in article 1727 from the date on which this tax should have been paid.
IV. - The tax deferral is terminated in the event of a withdrawal of securities or cash or a redemption made from the plan before the end of the fifth year following the date of the payment made under the conditions of B of II of this article or, if this event is earlier, when the taxpayer transfers his tax domicile outside France under the conditions provided for in article 167 bis.
For the application of the first paragraph of this IV, taxation is established, under the conditions of ordinary law, in respect of the year in which the event putting an end to the tax deferral occurs.
V. - The capital gain is definitively exempt at the end of the five-year period referred to in IV or, by way of derogation from the same IV, in the event of withdrawal or redemption resulting from redundancy, disability corresponding to classification in the second or third categories provided for in Article L. 341-4 of the Social Security Code or the death of the taxpayer or of one of the spouses or partners in a civil solidarity pact subject to joint taxation.
VI. - I to V apply to disposals, redemptions of shares in a société d'investissement à capital variable or units in a fonds commun de placement and dissolutions occurring between 1 April 2016 and 31 March 2017.
