French General Tax Code
In forceI. - The provisions of this article apply to commercial, industrial, craft, liberal or agricultural activities carried out on a professional basis.
II. - Capital gains on disposals subject to the regime of articles 39 duodecies to 39 quindecies, with the exception of those relating to property falling within the scope of A of article 1594-0 G, and carried out as part of one of the activities mentioned in I are, provided that the activity has been carried out for at least five years, exempt for:
1° Their entire amount where annual receipts are less than or equal to:
a) €250,000 in the case of businesses whose principal trade is the sale of goods, objects, supplies and food to be taken away or consumed on the premises or the provision of accommodation, excluding the direct or indirect letting of furnished residential premises or premises intended to be let furnished, or in the case of businesses carrying on an agricultural activity;
b) 90,000 € in the case of other companies or holders of non-trading profits;
2° Part of their amount when revenues are greater than 250,000 € and less than 350,000 € for companies mentioned in a of 1° and, when revenues are greater than 90,000 € and less than 126,000 €, for companies mentioned in b of 1°. For the application of these provisions, the exempt amount of the capital gain is determined by applying to it:
a) For businesses mentioned in a of 1°, a rate equal to the ratio between, in the numerator, the difference between €350,000 and the amount of revenue and, in the denominator, the amount of €100,000;
b) For businesses mentioned in b of 1°, a rate equal to the ratio between, in the numerator, the difference between €126,000 and the amount of revenue and, in the denominator, the amount of €36,000.
When the company's activity falls into the two categories defined in a and b of 1°, the total exemption is only applicable if the overall amount of revenue is less than or equal to €250,000 and if the amount of revenue relating to the activities defined in b of 1° is less than or equal to €90,000.
When these conditions are not met, if the overall amount of revenue is less than €350,000 and if the amount of revenue relating to the activities defined in b of 1° is less than €126,000, the exempt amount of the capital gain is determined by applying the lower of the two rates that would have been determined under the conditions set out in 2° if the business had made the overall amount of its revenue in the categories referred to in a of 1° or if the business had only made activities referred to in b of 1°.
III. - Capital gains realised on the sale of agricultural or forestry equipment by agricultural or forestry work companies are exempt under the conditions applicable to the companies mentioned in a of 1° of II. A decree specifies the terms of application of this III.
IV. - The amount of annual revenue is understood to be the average revenue, assessed exclusive of tax, realised in respect of the financial years closed, reduced where applicable to twelve months, during the two calendar years preceding the closing date of the financial year in which the capital gains are realised.
For companies whose revenue corresponds to sums received, the amount of annual revenue is understood to be the average revenue, assessed exclusive of tax, over the two calendar years preceding the year in which the capital gains are realised.
Where the taxpayer carries on several activities, the total amount of revenue realised in all of these activities is taken into account.
Revenue generated by the companies referred to in articles 8 and 8 ter and the groupings not subject to corporation tax of which he is a partner or member is also taken into account, in proportion to his rights in the profits of these companies and groupings.
For the application of the third and fourth paragraphs, revenue is aggregated by income category.
When capital gains are realised by a company or grouping mentioned in the fourth paragraph, the amount of annual revenue is assessed at the level of the company or grouping.
V. - For capital gains realised following expropriation or the receipt of insurance compensation, the condition that the business must have been carried on for at least five years is not required.
Expropriated land that does not meet the conditions mentioned in Article L. 322-3 of the Code de l'expropriation pour cause d'utilité publique shall not be considered as property falling within the scope of I of A of Article 1594-0 G of this Code.
VI. - The capital gains referred to in II and III mean net capital gains determined after offsetting against capital losses of the same nature.
VII. - The articles 150 U to 150 VH are applicable to capital gains realised on the disposal of furnished residential premises or premises intended to be let furnished and let directly or indirectly when this activity is not carried out on a professional basis.
VIII. - The provisions of this article do not apply to transfers of property or rights in a fiduciary estate carried out as part of a trust transaction defined in Article 2011 of the Civil Code.
