French Monetary and Financial Code
In forceI. - The sums distributable by a société de placement à prépondérance immobilière à capital variable in respect of a financial year are made up of :
1° Distributable income relating to income earned by the company, which is equal to the net income referred to in article L. 214-51, plus retained earnings, plus or minus the balance of accruals and deferrals defined by decree;
2° Capital gains realised on the sale of assets during the financial year, net of costs, less capital losses realised during the same financial year, net of costs, plus net capital gains realised during previous financial years which have not been distributed, plus or minus the balance of adjustment accounts defined by decree.
II. - Pursuant to I, the company distributes :
1° At least 85% of the distributable income relating to income from the assets referred to in 1° of I of article L. 214-36, in respect of the financial year in which they were realised. To determine the amount to be distributed, the net income is reduced by a flat-rate allowance equal to 1.5% of the cost price of the properties mentioned in 1° of I of article L. 214-36 held directly by the company;
2° At least 50% of the capital gains realised on the sale of the assets referred to in 1° of I of article L. 214-36, units in companies mentioned in 2° or 3° of the same I which are not liable for corporation tax or an equivalent tax, units or shares in companies mentioned in 3° of the same I when they benefit from a system of exemption from corporation tax on their real estate activity and units or shares in organisations mentioned in 5° of the same I, no later than in respect of the financial year following their realisation. To determine the amount to be distributed, the net capital gains realised on the properties referred to in 1° of I of article L. 214-36 held directly by the company are increased by the flat-rate allowance applied in accordance with 1° of this II since their acquisition;
3° The entire fraction of distributable income relating to income distributed by the companies mentioned in 3° of I of article L. 214-36 when they benefit from an exemption from corporation tax on their real estate business for the financial year in which it is realised.
III. - For the application of 1° and 2° of II, income and capital gains realised by a company mentioned in 2° or 3° of I of article L. 214-36 and which is not liable for corporation tax or an equivalent tax, as well as the income and capital gains realised by the bodies mentioned in 5° of the same I, are deemed to have been realised, to the extent of its rights, by the open-ended real estate investment trust (société de placement à prépondérance immobilière à capital variable) in respect of the financial year following that in which the company mentioned in 2° or 3° of the I of article L. 214-36 or the body mentioned in 5° of the same I realised the income or capital gains.
Income and capital gains relating to real estate assets located outside France are not taken into account when determining the amounts to be distributed if tax treaties signed with France to avoid double taxation on income tax provide for taxation of such income and capital gains at the place where the assets are located.
