French General Tax Code
In forceAt the option of taxpayers with agricultural profits subject to an actual taxation system, the agricultural profit used as the basis for the progressive tax is equal to the average of the profits for the tax year and the two previous years. In calculating this average, no account is taken of losses carried forward.
The option is valid for the year in respect of which it is exercised and for the following two years. It is tacitly renewed for a period of three years, unless renunciation is sent to the tax department within the deadline for filing the income tax return for the last financial year of each three-year period. In the event of renunciation, a new option may not be exercised before the expiry of a three-year period.
The option may not be made either for the taxation of the first two years of application of the actual taxation system or for that of the year of disposal or cessation.
However, the option may be made for taxation of the year in which the operator contributes his business to a company.
It is exclusive of the option provided for in article 75-0 A for exceptional income defined in a of 2 of this article.
In the year of the transfer or cessation, or, if the method of assessing profit provided for in the first paragraph is waived, in the last year of its application, the excess of agricultural profit over the three-year average is taxed at the marginal tax rate applicable to the taxpayer's overall income determined taking account of this three-year average.
For the application of the sixth paragraph, the contribution of an individual farm, under the conditions mentioned in I of l'article 151 octies, to a company or grouping whose profits are, pursuant to article 8, subject to income tax in the farmer's name in the agricultural profits category, does not constitute a transfer or cessation of the business. However, the contributor may waive, in accordance with the terms and conditions set out in the second paragraph, the benefit of the method of assessing agricultural profits provided for in the first paragraph in respect of the year during which the contribution is made.
For the application of the sixth paragraph, the merger, demerger or partial contribution of assets made, under the conditions mentioned in the second paragraph of I of Article 151 octies A, does not constitute a transfer or cessation of the farm. However, taxpayers may waive, in accordance with the terms and conditions set out in the second paragraph of this article, the benefit of the method of assessing agricultural profits provided for in the first paragraph in respect of the year during which the transaction is carried out.
