French Monetary and Financial Code
In forceI. - The sums distributable by a real estate investment fund in respect of a financial year are made up of :
1° Distributable income relating to income earned by the fund, which is equal to the net income referred to in article L. 214-51, plus retained earnings, plus or minus the balance of accruals as defined by decree;
2° Capital gains from the sale of assets mentioned in 1° and 2° of I of Article L. 214-36 and in 5° of I of Article L. 214-37, as defined in the last sentence of 1° of Article L. 214-37, realised during the financial year, net of expenses, plus capital gains of the same nature realised during previous financial years which have not been distributed and, where applicable, reduced or increased by the balance of accruals as defined by decree;
3° Capital gains on the disposal of assets other than those mentioned in 1° and 2° of I of article L. 214-36 realised during the financial year, net of costs and less capital losses net of costs realised during the same financial year, plus capital gains of the same nature realised during previous financial years which have not been distributed and, where applicable, reduced or increased by the balance of adjustment accounts as defined by decree.
For the application of I, income and capital gains realised by a company referred to in 2° of I of article L. 214-36 and by a real estate investment fund, a professional real estate investment fund or a body governed by foreign law, as referred to in the last sentence of 1° of article L. 214-37, are deemed to have been realised by the real estate investment fund to the extent of its direct or indirect rights in this company or in this fund.
II. - The real estate investment trust distributes :
1° At least 85% of the portion of distributable income within the meaning of 1° of I relating to the following assets:
a) Real estate assets referred to in 1° of I of article L. 214-36 that the fund holds directly or through a company referred to in article L. 214-80 or a real estate investment trust, a professional real estate investment trust or a similar body governed by foreign law referred to in the last sentence of 1° of article L. 214-37, as the case may be, in respect of the year in which they are realised. To determine the amount to be distributed, net income is reduced by a flat-rate allowance equal to 1.5% of the cost price of the properties held directly by the fund;
b) Other assets held directly by the fund or through a company referred to in article L. 214-80 in respect of the financial year in which they are realised;
2° At least 85% of the distributable capital gains referred to in 2° of I, realised during the financial year, less, where applicable, the allowance provided for in I of Article 150 VC of the General Tax Code, realised by the fund or through a company referred to in Article L. 214-80:
a) On the sale of the real estate assets mentioned in 1° of I of article L. 214-36 in respect of the year of sale;
b) On the disposal of the shares in companies referred to in 2° of the I of Article L. 214-36, in respect of the year of disposal;
c) On the sale of units in real estate investment funds, professional real estate investment funds, or bodies governed by foreign law, as mentioned in the last sentence of 1° of Article L. 214-37;
3° At least 85% of the capital gains realised directly by the fund and through the intermediary, as the case may be, of a company mentioned in Article L. 214-80, a real estate investment trust, a professional real estate investment trust or an undertaking governed by foreign law, as mentioned in the last sentence of 1° of Article L. 214-37, on the disposal of assets other than those mentioned in 2°, in respect of the financial year in which they were realised.
