French General Tax Code
In forceI.-1. Single-member simplified joint stock companies (sociétés par actions simplifiées), known as "sociétés unipersonnelles d'investissement à risque", owned by a natural person, are exempt from corporation tax until the end of the tenth financial year following the year in which they were created, which, from the time of their creation, have as their sole corporate purpose the subscription in cash to the initial capital or to capital increases of companies having their registered office in a State of the European Union or in another State party to the Agreement on the European Economic Area which has concluded an administrative assistance agreement with France with a view to combating tax evasion and avoidance, whose securities are not admitted to trading on a French or foreign financial instruments market operated by a market undertaking or an investment services provider other than a portfolio management company or any other similar foreign body, which carry on an activity mentioned in Article 34 and which are subject to corporation tax under the conditions of ordinary law at the normal rate or would be subject to it under the same conditions if the activity were carried out in France.
Les sociétés unipersonnelles d'investissement à risque must hold no more than 30% of the financial and voting rights of the companies in which they invest.
2. The companies whose securities are included in the assets of the single-member venture investment company must also meet the following conditions:
a. They have been created for less than five years on the date of the first subscription by the single-member venture investment company;
b. They are new within the meaning of Article 44 sexies or created for the purpose of taking over the business of a company for which there has been a judgment ordering the transfer pursuant to article L. 631-22 of the French Commercial Code, in the absence of any safeguard or receivership plan, or ordering its compulsory liquidation;
c. They are majority-owned by natural persons or by legal entities majority-owned by natural persons.
3. The member of a société unipersonnelle d'investissement à risque, his spouse and their ascendants and descendants together hold, directly or indirectly, no more than 30% of the financial and voting rights of the companies whose securities are included in the assets of the company and have not reached this level of holding since their creation. They do not hold any of the positions listed in 1° of 1 of III of article 975.
4. By way of derogation from the provisions of 1, sociétés unipersonnelles d'investissement à risque may grant current account advances of up to 15% of their gross book assets to the companies in which they have invested. They may also hold other assets up to a limit of 5% of their gross book assets.
II.-Failure to comply with one of the conditions mentioned in I will result in the loss of the exemption provided for in the same I, for the current financial year and subsequent financial years.
However, the exemption from corporation tax is maintained until the end of the tenth financial year following that of the creation of the société unipersonnelle d'investissement à risque, when the shares of the company are transferred free of charge following the death of the initial sole shareholder and the conditions provided for in I, other than those relating to the single shareholder, are met.
III.-The exemption provided for in I only applies to companies created before 1 July 2008.
