French General Tax Code
In forceI. 1° Taxpayers domiciled in France for tax purposes may benefit from a reduction in their income tax equal to 18% of payments made in respect of cash subscriptions made under the same conditions as those provided for in 1 and 2 of I of Article 885-0 V bis, as it stood on 31 December 2017.
However, the rate is set at 25% for payments made until 31 December 2023.
2° The benefit of the tax advantage provided for in 1° of this I is subject to compliance, by the company receiving the subscription, with the conditions provided for in 1 bis of I of Article 885-0 V bis, in the version in force on 31 December 2017.
For the application of the first paragraph of this 2°, brokerage and foreign exchange activities are considered to be financial activities.
3°The tax advantage provided for in 1° also applies when the company receiving the subscription meets the conditions mentioned in a to f of 3 of I of Article 885-0 V bis, in the version in force on 31 December 2017.
The amount of payments in respect of the subscription made by the taxpayer is taken into account, for the tax reduction base, up to the fraction determined by retaining:
-at the numerator, the amount of payments made by the company mentioned in the first paragraph of this 3°, in respect of subscriptions mentioned in 1° in companies verifying all of the conditions set out in 2°, before the closing date of the financial year during which the taxpayer made the payments corresponding to his subscription in this company;
and at the denominator, the total amount of payments received during this same financial year by the said company and relating to the subscription to which the payments made by the taxpayer relate.
The income tax reduction is granted in respect of the year of the close of the financial year of the company mentioned in the first paragraph during which the taxpayer made the payment in respect of his subscription.
A decree sets the conditions under which investors are informed annually of the detailed amount of direct and indirect fees and commissions that they bear and the conditions under which these fees are framed. For the application of the previous sentence, companies whose remuneration comes mainly from advisory or management mandates obtained from taxpayers making the payments mentioned in 2° or this 3° are treated in the same way as the companies mentioned in this 3°, when these mandates relate to these same payments.
For statistical purposes, each year, before 30 April of the following year and in accordance with the conditions defined by joint order of the ministers responsible for the economy and the budget, the company sends the tax authorities a summary statement of the companies financed, the securities held and the amounts invested during the year. The information appearing on this statement is that at 31 December of the year.
II. Payments giving entitlement to the tax reduction referred to in I are held within the annual limit of €50,000 for single, widowed or divorced taxpayers and €100,000 for married taxpayers or taxpayers bound by a civil solidarity pact subject to joint taxation.
The fraction of a year exceeding, where applicable, the limits referred to in the first paragraph gives entitlement to the tax reduction under the same conditions in respect of the following four years.
The reduction in tax due provided by the amount of the tax reduction mentioned in I which exceeds the amount mentioned in the first paragraph of 1 of article 200-0 A may be carried forward against income tax due in respect of subsequent years up to and including the fifth year. To determine this excess in respect of a given year, account is taken of the tax reduction granted in respect of payments made during the year in question and the deferred payments referred to in the second paragraph of this II, as well as the deferrals of the tax reduction recorded in respect of previous years.
II bis. - (Repealed)
II ter. - (Repealed)
III. - The benefit of the tax reduction referred to in I is subject to compliance with Article 21 of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union.
IV. The provisions of 5 of I of Article 197 are applicable.
The benefit of the tax advantage provided for in I of this article is subject to compliance with the conditions provided for in II of Article 885-0 V bis, as it stands on 31 December 2017. The same exceptions apply.
V. A decree shall set the terms and conditions for the application of this article, in particular the reporting obligations incumbent on taxpayers and companies.
VI. - 1. Taxpayers domiciled in France for tax purposes may benefit from a reduction in their income tax equal to 18% of payments made in respect of cash subscriptions to units in funds or organisations mentioned in 1 of III of Article 885-0 V bis, as it stood on 31 December 2017, subject to compliance with the conditions set out in the same 1.
However, the rate is set at 25% for payments made until 31 December 2023.
2. Payments giving entitlement to the tax reduction referred to in 1 of this VI are retained, after deducting entry fees or charges and in proportion to the investment quota referred to in the first paragraph of c of 1 of III of Article 885-0 V bis, in the version in force on 31 December 2017, which the fund undertakes to achieve, within the annual limits of €12,000 for single, widowed or divorced taxpayers and €24,000 for married taxpayers or those linked by a civil solidarity pact and subject to joint taxation.
2 bis. A decree sets the conditions under which unitholders are informed annually of the detailed amount of direct and indirect fees and commissions that they bear and the conditions under which these fees are controlled.
3. 3 and 4 of III of Article 885-0 V bis, in the version in force on 31 December 2017, shall apply under the same conditions.
4. (Repealed)
VI bis. - (Repealed)
VI ter. - The rate of the tax benefit referred to in VI is increased to 30% for payments made in respect of cash subscriptions for units in local investment funds, referred to in Article L. 214-31 of the Monetary and Financial Code, at least 70% of whose assets are made up of transferable securities, limited liability company shares and current account advances issued by companies that carry out their activities exclusively in establishments located in Corsica.
The tax reductions provided for in VI and this VI ter are mutually exclusive for subscriptions to the same fund.
VI ter A. - Taxpayers domiciled in France for tax purposes are entitled to a reduction in their income tax equal to 30% of payments made in respect of cash subscriptions to units in local investment funds, as referred to in Article L. 214-31 of the Monetary and Financial Code, at least 70% of the assets of which consist of financial securities, limited liability company shares and current account advances issued by companies that carry out their activities exclusively in establishments located in the overseas departments, Saint-Barthélemy, Saint-Martin, Saint-Pierre-et-Miquelon, New Caledonia, French Polynesia and the Wallis and Futuna Islands.
The 2, 2 bis and 3 of VI of this article and the a, b and penultimate paragraphs of 1 of III of article 885-0 V bis, in its wording in force on 31 December 2017 are applicable.
The tax reductions provided for in VI of this article and in this VI ter A are exclusive of each other for subscriptions in the same fund.
VI quater. - The tax reductions mentioned in I, VI, VI ter and VI ter A do not apply to securities held in a share savings plan mentioned in article 163 quinquies D, in a retirement savings plan mentioned in article L. 224-1 of the Monetary and Financial Code or in an employee savings plan mentioned in Title III of Book III of Part Three of the Labour Code, nor to the fraction of payments made in respect of subscriptions which have given entitlement to the tax reductions provided for in f or g of 2 of article 199 undecies A, articles 199 undecies B, 199 terdecies-0 B, 199 unvicies or 885-0 V bis, in the version in force on 31 December 2017 of this code.
For the benefit of the tax reduction mentioned in I of this article, the second and third paragraphs of V of article 885-0 V bis, in its wording in force on 31 December 2017 are applicable.
VI quinquies. - (Repealed)
VII. - A decree sets out the terms and conditions for the application of VI, in particular the reporting obligations incumbent on unit holders and fund managers and custodians.
The amount of direct and indirect fees and commissions charged in respect of a single payment mentioned in 1° or 3° of I or in VI to VI ter A by the companies mentioned in the first paragraph of 3° of I, by the fund managers and custodians mentioned in VI to VI ter A, by companies and individuals carrying on an advisory or management business within the meaning of Article L. 321-1 of the Monetary and Financial Code in respect of the payment or by natural persons or legal entities linked to them within the meaning of articles L. 233-3, L. 233-4 and L. 233-10 of the Commercial Code may not exceed a ceiling set by order of the Minister for the Economy, the level of which takes into account the amount of the payment, the net asset value of the funds and the distributions made.
As an exception to the second paragraph of this VII, the amount of direct and indirect fees and commissions charged in respect of a single payment may, in exceptional circumstances, exceed this ceiling when the excess corresponds entirely to costs incurred to deal with an unforeseeable situation beyond the control of the persons referred to in the same second paragraph and in the interests of investors or unitholders.
Without prejudice to any penalties that the Autorité des marchés financiers may impose, any breach of these prohibitions is punishable by a fine which may not exceed ten times the charges unduly levied.
