French General Tax Code
In forceI. - The credit institutions and finance companies referred to in article L. 511-1 of the Monetary and Financial Code passible for corporation tax, income tax or an equivalent tax, having their registered office in a Member State of the European Union or in another State party to the Agreement on the European Economic Area that has concluded an administrative assistance agreement with France to combat tax fraud and evasion, may benefit from a tax credit in respect of the non-interest-bearing loans referred to in Article L. 31-10-1 of the Construction and Housing Code.
The conditions for granting and the terms and conditions of the interest-free loans mentioned in the first paragraph are set each year by decree under the conditions provided for in Articles L. 31-10-1 et seq. of the Construction and Housing Code. An impact study attached to the decree sets out the measures taken to ensure that the amount of tax credits relating to interest-free loans issued over a single twelve-month period does not exceed €2.1 billion. This amount refers to the gross amount of tax credits granted, less the corresponding corporate income tax. (1)
II. - The amount of the tax credit is equal to the difference between the discounted sum of the monthly instalments due in respect of the non-interest-bearing loan and the discounted sum of the amounts received in respect of a loan of the same amount and repayment period, granted under normal interest rate conditions on the date of issue of the non-interest-bearing loan offer.
The period of availability of funds referred to in the last paragraph of article L. 31-10-11 of the Construction and Housing Code is not taken into account when calculating the tax credit.
The methods for calculating the tax credit and determining the rate mentioned in the first paragraph are set by decree.
The tax credit gives rise to an inalienable and non-transferable claim for the same amount in favour of the credit institution or finance company. This claim constitutes taxable income attached in the amount of one-fifth in respect of the financial year during which the credit institution or finance company paid out non-interest-bearing loans and in equal fractions over subsequent financial years.
In the event of a merger, the debt of the absorbed company is transferred to the absorbing company. In the event of a demerger or partial contribution of assets, the receivable is transferred to the transferee company on condition that all related interest-free loans paid to individuals by the demerged or transferring company are transferred to the transferee company.
III. - The company referred to in the fifth paragraph of Article L. 312-1 of the Construction and Housing Code is required to provide the tax authorities, within four months of the close of each credit institution's or finance company's financial year, with information relating to the non-interest-bearing loans paid by each credit institution or finance company, the total amount of the corresponding tax credits obtained and their monitoring.
IV. - Where the partnerships referred to in Articles 8 and 238 bis L or the groupings mentioned in Articles 239 quater, 239 quater B and 239 quater C are not subject to corporation tax, the tax credit may be used by the partners in proportion to their rights in these companies or groupings, provided that the members are liable for corporation tax or are natural persons participating in the operation within the meaning of 1° bis of I of article 156.
