French General Tax Code
In forceI. - Net gains from transfers for valuable consideration of corporate rights in companies or groupings falling within the articles 8 to 8 ter, whose assets are mainly made up of real estate or rights relating to such property, are subject exclusively to the tax regime provided for in I and 1° of II of article 150 U. For the purposes of this provision, companies whose assets, at the close of the three financial years preceding the sale, comprise more than 50% of their real value in the form of real estate or rights to real estate not used by these companies for their own industrial, commercial or agricultural operations or for the exercise of a non-commercial profession, are deemed to be companies with a preponderance of real estate assets. If the company whose corporate rights are being sold has not yet closed its third financial year, the composition of the assets is assessed at the close of the only financial year(s) closed or, failing that, at the date of the sale.
II. - The provisions of I do not apply, in respect of the year in which the securities are exchanged, to capital gains realised in connection with a merger, demerger or contribution of securities to a company subject to corporation tax. This exception does not apply to exchanges with a balancing payment where the amount of the balancing payment received by the taxpayer exceeds 10% of the nominal value of the securities received. Where the amount of the balancing payment received by the taxpayer does not exceed this threshold, the capital gain realised on the exchange transaction is, up to the amount of this balancing payment, taxed in respect of the year of the exchange in accordance with the provisions of I.
III. - Where the securities received in the cases provided for in II of article 92 B in the version in force before 1 January 2000, in the third and fifth paragraphs of article 150 A bis in force before the date of promulgation of the Finance Act for 2004 (no. 2003-1311 of 30 December 2003) or to I ter of the article 160 in the version in force before 1 January 2000 are the subject of a new exchange transaction under the conditions defined in II, taxation of the previously deferred capital gain is automatically deferred to the time of the sale, repurchase, redemption or cancellation of the new securities received.
