French General Tax Code
In force1. Capital grants awarded to a company by the European Union or the bodies set up by its institutions, the State, local authorities or any public body for the creation or acquisition of specific fixed assets are not included, at the company's option, in the results for the financial year in progress on the date they are awarded; in this case, they are taxable under the conditions defined in this article.
When they have been used for the creation or acquisition of a depreciable fixed asset, these grants are added back to taxable profits at the same time and at the same rate as that at which the fixed asset in question is depreciated. This rate is determined, for each financial year, by the ratio existing between the annual depreciation charge made at the close of the financial year concerned on the cost price of this fixed asset and this same cost price.
Subsidies allocated to the creation or acquisition of a non-depreciable fixed asset are deducted in equal fractions from the taxable profits of the years during which this fixed asset is inalienable under the terms of the contract granting the subsidy or, in the absence of an inalienability clause, from the profits of the ten years following the year in which the subsidy was granted ;
When the subsidy is awarded to the lessee directly or when it is awarded through a leasing company and the decision awarding the subsidy provides for its immediate repayment to the lessee, the subsidy is distributed, in equal shares, over the financial years ended during the period covered by the leasing contract.
In the event of the sale of the fixed assets referred to in the second and third paragraphs, the portion of the subsidy not yet included in the tax base is included in the taxable profit for the financial year during which the sale takes place. However, for transactions referred to in I of Articles 151 octies and 151 octies A or placed under the regime provided for in article 210 A, upon option exercised in the deed of contribution or the merger agreement, this fraction is carried forward to the results of the company receiving the contribution, in equal proportions, over the period referred to in the third paragraph remaining at the date of this transaction in the case of non-depreciable assets, and over the depreciation period in the case of depreciable assets. In the event of a subsequent sale of the assets in question, the portion of the subsidy not yet included in the taxable income of the company receiving the contribution will be included in its taxable income for the year of sale. These provisions apply in the event of the transfer or termination of a leasing contract; the period referred to in the second sentence then refers to the period remaining on the date of the transaction concerned until the expiry of the contract.
2. The provisions of 1 are applicable to equipment subsidies paid to their members by approved professional groups provided for by decree no. 55-877 of 30 June 1955.
3. 1 is also applicable to sums received in respect of operations enabling energy savings to be made, giving entitlement to the award of energy saving certificates provided for in Article L. 221-7 of the Energy Code, when they are allocated to the creation or acquisition of the fixed assets referred to in 1 of this article.
