French General Tax Code
In forceI. - Where a person acquires the right to payment of the principal or the right to payment of interest on a bond arising from a stripping carried out before 1 June 1991, the redemption premium means the difference between:
a) The principal or interest that he receives;
b) The subscription price or the original acquisition price of the corresponding right.
II. - Constitutes a redemption premium:
1. For the negotiable loans referred to in Article 118 and in 6° and 7° of article 120, and the negotiable debt securities referred to in l'article 124 B issued on or after 1 January 1992, the difference between the sums or values receivable and those paid on acquisition; however, interest paid each year and still receivable after acquisition is not included in the definition of the premium;
2. For loans or securities of the same nature stripped as from 1 June 1991, the difference between the sums or values to be received and the acquisition price of the right to payment of principal, interest or any other remuneration of the loan, or of the security representing one of these rights.
The provisions of this II are applicable to a loan which is the subject of successive issues and a single stock market listing if part of this loan was issued after 1 January 1992.
III. - The provisions of 1 and 2 of II only apply to securities issued from 1st June 1985. They do not apply to securities dismembered in the course of an inheritance.
The provisions of II apply to all contracts mentioned in Article 124 which are entered into or dismembered on or after 1 January 1993.
The provisions of II also apply to loans, securities or rights referred to in 6° and 7° of Article 120 issued or stripped as from 1 January 1993 or which are the subject of successive issues and a single stock exchange listing if part of these loans was issued as from the same date.
IV. - The provisions of this article cease to apply to securities or rights issued as from 1 January 1993 and held by taxpayers other than those mentioned in V of article 238 septies E.
V. - Where the securities or rights referred to in II and III have been received, as from 1 January 2000, as part of an exchange transaction under the conditions provided for in article 150-0 B, in the fourth paragraph of article 150 A bis in force prior to the date of enactment of the Finance Act for 2004 (no. 2003-1311 of 30 December 2003) or to II of article 150 UB, the redemption premium referred to in II is calculated on the basis of the acquisition price or value of the securities or rights handed over in exchange, less the amount of the balancing payment received, which has not been subject to taxation in respect of the year of the exchange, or plus the balancing payment made at the time of this exchange.
