Business Operations in France (Portfolio 7130)

Tax Management Portfolio, Business Operations in France, contains information designed to enable U.S. and other foreign investors to understand the commercial and tax law likely to be of concern to them in their business dealings with France. To view this Portfolio, visit Bloomberg Tax for a free trial.

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Description

Tax Management Portfolio, Business Operations in France, No. 7130, contains information designed to enable U.S. and other foreign investors to understand the commercial and tax law likely to be of concern to them in their business dealings with France.

The Portfolio provides an overview of the principal problems confronting foreign businesses conducting operations in France. It examines the taxation of domestic and foreign corporations, partnerships, other business entities, resident individuals, and nonresident aliens. It also discusses the net wealth tax, inheritance and gift taxes, registration duties, local taxes, and the value added tax.

Rates of local taxes may vary considerably according to the location, and their level may be an important consideration when evaluating an investment proposal in France. The various taxes in this category and the value added tax, the single biggest revenue raiser, are discussed in detail. Finally, chapters are devoted to French anti-avoidance measures and to the application of tax treaties, with particular emphasis on the France-United States tax treaty.

The Portfolio also analyzes the various forms of doing business in France, investment incentives, exchange controls, distribution networks, labor and social security laws, and restrictive trade practices.

This Portfolio may be cited as Milhac and Bailleul-Mirabaud, 7130 T.M., Business Operations in France.

Authors

Edouard Milhac

Edouard Milhac graduated from the University of Paris-Dauphine (Masters in Business Administration in 1988 and post-graduate degree in Taxation in 1999). He was seconded to the New York office of CMS BFL from 1994 to 2000; partner, CMS BFL, France.

Annabelle Bailleul-Mirabaud

Annabelle Bailleul-Mirabaud graduated from the HEC business school (2001). She also holds a postgraduate degree in business law (University of Paris XI, 2001). She has been an associate with CMS Bureau Francis Lefebvre since 2003.

Table of Contents

Detailed Analysis
I. General Background
Introductory Material
A. Governmental Organization
1. Central Government
2. Local Government
a. Municipalities (Communes)
b. Départements
c. Regions (Régions)
B. Legal System
1. Sources of Law
a. Domestic and European Legislation: Code, Laws, Decrees, Orders, European Treaties and Regulations
b. Pre-legislative Debate (Travaux Préparatoires)
c. Case Law (Jurisprudence)
d. Learned Commentary (Doctrine)
e. Ministerial Replies (Réponses Ministérielles)
2. Court System
a. Administrative Jurisdiction
b. Judicial Jurisdiction
(1) General Jurisdiction
(2) Special Jurisdiction
(a) Commercial Courts (Tribunaux de Commerce)
(b) Labor Courts (Conseils de Prud'hommes)
(c) Other Courts
(d) Jurisdictional Conflicts
3. Members of the Legal Profession
a. Magistrature
b. Avocats
c. Avocats aux Conseils
d. Huissiers (Bailiffs)
e. Notaires (Notaries)
II. Operating a Business in France
A. Foreign Investment Regulations
1. Currency
2. Foreign Investment Controls
3. Exchange Controls
a. General Scope of Governmental Control
b. Definitions of “Resident” and “France”
c. Scope of Regulations
(1) Declaration for Statistical Purposes to the Banque de France
(2) Filing with the Customs Service
d. Penalties
e. Enforcement
4. Restrictions Based on Nationality
a. Visa
b. Residence Permits
c. Work Permits
d. Temporary Stay Card
e. Special Legislation Regarding European Union Member States
B. Trade and Commerce Regulations
1. Regulation of Business and Competition
a. Agreements and Concerted Practices/Abuse of a Dominant Position
(1) Scope
(2) Exemption
(3) Enforcement
b. Purchasing Agreements
c. Merger Control
(1) Scope of the Regulation
(a) General Rule
(b) Reduced Thresholds
(2) Consequences of the Application of French Merger Control Law
(3) Decision
(4) Timelines
(5) Sanctions
2. Intellectual Property
a. Patents
(1) French Patents
(2) European Patents
(3) European Patent with Unitary Effect
b. Semiconductors
c. Plant Variety Certificate
d. Trademarks and Trade Names
(1) Trademarks
(a) French Trademarks
(b) European Union Trademarks
(2) Trade Names
e. Copyrights and Software
(1) Patrimonial Rights
(2) “Moral” Rights
f. Designs and Models
(1) French Designs and Models
(2) European Designs and Models
g. Databases
(1) Copyright Protection
(2) Sui Generis Protection
3. Business and Trading Partners: Sales Representatives
a. Traders
(1) Distributors
(2) Courtiers (Brokers)
(3) Commission Agents (Commissionnaires)
b. Commercial Agents (Agents Commerciaux)
c. Salaried Salesmen (Voyageurs, Représentants, Placiers)
C. Labor Law and Social Security
1. Labor Law
a. Individual Employment Contracts
(1) Definition
(2) Forms of Employment Contract
(3) Formation of an Employment Contract
(4) Contents of a Contract
(5) Dismissal Procedure
(a) Termination Relating to the Individual
(b) Termination for Economic Reasons
(c) Consequences of Dismissal
(6) Amicable Termination of the Employment Relationship
(7) Social Security Contributions and Severance Indemnity
(8) Paid Vacations
(9) Working Time
(a) Normal Hours
(b) Special Arrangements Allowing More Flexibility
(c) Part-Time Work
(10) Employment Conditions
b. Employees' Representation
(1) Representative Institutions with Elected Members
(a) Works Council
(b) Personnel Delegates (Délégués du Personnel)
(c) Hygiene, Safety and Working Conditions Committee
(d) Group Level Works Council
(2) Representative Institutions with Appointed Members
(a) Union Delegate (Délégué Syndical)
(b) Union Representation on the Works Council
(3) Protection
(4) Employment Agreements
2. Social Security
a. General Social Security System Applicable to Employees
(1) Health Insurance
(a) Entitlement
(b) Nature of Benefits
(2) Family Allowances
(3) Retirement Benefits — General System
b. Employee's Complementary Retirement Scheme
c. Unemployment Insurance Scheme
d. Independent Workers
(1) Family Allowances
(2) Health Insurance
(3) Retirement Benefits
III. Forms of Doing Business in France
Introductory Material
A. Limited Liability Company (Société à Responsabilité Limitée (SARL) and Entreprise Unipersonnelle à Responsabilité Limitée (EURL))
1. Formation
a. Corporate Purpose
b. Corporate Name
c. Founding Members
d. Capital
e. Registration
f. Withdrawal of Share Capital
2. Operations
a. Amendment of By-Laws
b. Increases and Reductions of Capital
(1) Capital Increase
(2) Capital Reduction
(3) Publication Formalities
c. Transfers of Shares
d. Management
(1) Appointment/Termination
(2) Authority
(3) Contracts Between the Company and Managers or Shareholders
(4) Prohibited Operations
(5) Remuneration
(6) Employment Contract
(7) Liability
(8) Publication Formalities
e. Statutory Auditor (Commissaire aux Comptes)
f. Shareholders' Meetings
(1) Meeting or Written Consent
(2) Ordinary and Extraordinary Decisions
g. Books and Records
h. Financial Statements
i. Dividends and Other Distributions
j. Reserves
3. Dissolution and Liquidation
a. Dissolution
b. Liquidation
B. Joint Stock Company (Société Anonyme (SA))
1. Formation
a. Purpose Clause
b. Corporate Name
c. Founding Members
d. Capital
e. Registration
2. Operation
a. Amendment of By-Laws
b. Increase and Reduction of Capital
(1) Capital Increase
(2) Capital Reduction
(3) Reimbursement of Capital
(4) Publication Requirements
c. Transfers
d. Management
(1) Société Anonyme Managed by a Board of Directors
(a) Directors
(b) Chairman of the Board of Directors
(c) Executive Management
(d) Directors' Meetings
(2) Société Anonyme Managed by a Directorate and Supervisory Council
(a) Directorate
(b) Supervisory Council
e. Statutory Auditors
(1) Appointment
(2) Duties
(3) Liability
f. Shareholders' Meetings
(1) Convening a Shareholders Meeting
(2) Agenda
(3) Voting Right and Proxies
(4) Attendance
g. Books and Records
h. Financial Statements
i. Dividends and Other Distributions
j. Reserves
k. Dissolution and Liquidation
C. Simplified Stock Corporations (Société par Actions Simplifiée (SAS))
1. Formation
2. Operation
D. European Company or Societas Europaea (SE)
E. General Partnership (Société en Nom Collectif (SNC))
F. Limited Partnership (Société en Commandite Simple (SCS)) and Limited Stock Corporation (Société en Commandite par Actions (SCA))
1. Limited Partnership Société en Commandite Simple (SCS)
2. Limited Stock Corporation (Société en Commandite par Actions (SCA))
G. Branch of a Foreign Corporation
1. Registration Formalities
2. Applicable Law
3. Books and Records
4. Financial Statements
H. Economic Interest Group (Groupement d'Intérêt Économique (GIE))
1. French Groupement d'Intérêt Économique (French GIE)
2. European Union Groupement d'Intérêt Économique (GEIE)
IV. Fiscal Law
A. Sources of Fiscal Law
1. Domestic Sources
2. International Sources
a. International Treaties
b. European Union
B. Organization of the Tax Administration
1. Local Tax Centers (Centres des Finances Publiques): Assessment, Collection and Verification
2. Main Central Services
a. National Directorate of Tax Audits (Direction Nationale des Vérifications de Situations Fiscales)
b. Directorate of National and International Audits (Direction des Vérifications Nationales et Internationales)
c. National Directorate of Tax Investigations (Direction Nationale d'Enquêtes Fiscales)
d. Directorate for Fiscal Legislation (Direction de la Législation Fiscale)
e. Department in Charge of APA and MAP Programs
3. Judicial Organization
a. Jurisdiction of Judicial Courts
b. Administrative Jurisdiction
V. Principal Taxes
A. Corporate Income Tax and Other Taxes on Corporations
B. Individual Income Tax
1. In General
2. Pay As You Earn System
C. Net Wealth Tax
D. Registration Duties: Inheritance, Gift, Corporate
E. Local Taxes
F. Direct Taxes on Salaries
G. Value Added Tax
H. Other Indirect Taxes
VI. Taxation of Domestic Corporations
Introductory Material
A. French Entities Subject to Corporate Income Tax
1. Corporate Income Tax Liability Resulting from Corporate Form
2. Corporate Income Tax Liability Resulting from Corporate Purpose
3. Corporate Income Tax Liability Resulting from Election
4. Special Rules Applicable to Sociétés en Commandite Simple, Sociétés en Participation and Sociétés de Copropriétaires de Navires
5. Noncorporate Entities
6. Entities Exempt from Corporate Income Tax
B. Practical Application of Corporate Income Tax
1. Taxation of Income
a. Separate Taxation of “Capital” Companies
b. All Categories of Income Liable to Tax
c. Territoriality
d. Exceptions to Territorial Principle and Distinct Taxation of Separate Companies: Anti-Avoidance Measures
(1) Assets Transferred Abroad in Trust
(2) Profits from Certain Subsidiaries and Establishments Organized in Jurisdictions Deemed to Have a Privileged Tax Status
(3) Transactions with Non-cooperative States or Territories
e. Tax Consolidation Regime
(1) Perimeter
(2) Tax Payment
(3) Transfer of Losses
(4) Intragroup Dividends
(5) End of the Tax Consolidated Group
f. Exceptions to Principle of Including All Categories of Income in Tax Base: The Participation Exemption Regime
(1) In General
(2) Capital Gains
2. Accounting
a. Commercial Code (Code de Commerce)
b. Commercial Company Law
c. The General Accounting Plan (Plan Comptable Général)
d. French Tax Code (Code Général des Impôts)
e. Special Requirements
f. Accounting Period
g. Calculation of Taxable Income
h. Inventories
i. Reserves
3. Calculation of Gross Income
a. General
(1) Assessment Period
(2) Determination of Taxable Income
b. Capital Gains
(1) Short-Term and Long-Term Capital Gains
(2) Tax Treatment of Short-Term Capital Gains and Losses
(3) Tax Treatment of Long-Term Capital Gains and Losses
c. Dividend Income
(1) General
(2) Tax Credit with Respect to Foreign-Source Securities Income
(3) Tax Treatment of Parent and Subsidiary
d. Income from Foreign Sources
e. Accessory Items (Produits Accessoires)
(1) Real Property Income
(2) Agricultural and Noncommercial Profits
(3) Royalties
f. Interest
g. Subsidies and Waived Claims
h. Exclusions from Gross Income
(1) Dividends
(2) Subsidies
4. Business Expenses
a. General
(1) Deductible Expenses
(2) Exclusions
(3) Other Deductible Expenses
b. Organizational Expenses
c. Travel and Entertainment Expenses
d. Interest
(1) Loan Interest
(a) Thin Capitalization Rules (Article 212, CGI)
(b) Interest Relating to Acquisitions of Participation Shares (Article 209 IX, CGI)
(c) General Limitation on Interest Deduction
(i) Financial Expenses
(ii) Financial Income
(d) Limitation on the Deductibility of Financial Expenses Related to the Acquisition of a Company which Is or Becomes a Member of the Tax Group (“Amendement Charasse”)
(e) Anti-Abuse Provision
(2) Interest on Capital
e. Royalties
f. Taxes, Fines and Penalties
g. Depreciation and Amortization
(1) General
(2) Declining-Balance Method
(3) Declining-Balance Method Rates
(4) Additional Depreciation Allowances
(a) Film and Audiovisual Productions
(b) Investments in Overseas Departments/Overseas Territories
(c) IT Materials
(d) Premises Built by Small or Medium-Sized Enterprises in Connection with Approved Operations
(e) Shares in Approved Research Companies and “Financial Innovation Companies”
(f) Obsolete Equipment
(g) Industrial Robots
(h) Heavy Trucks
h. Charitable Contributions
i. Capital Losses
j. Reserve Accounts
k. Bad Debts
l. Inventory Write-Downs
m. Rents and Outside Services
(1) Rental of Business Premises
(2) Upkeep and Repair Expenses
(3) Supplies and Equipment of Nominal Value
(4) Scientific Research Program Operating Expenses
n. Commissions and Fees
o. Insurance Premiums
p. Transportation and Travel Expenses
q. Wages and Salaries
(1) General Principles
(2) Allowances and Lump Sum Reimbursement of Expenses
r. Social Welfare and Other Expenses
s. Expenses Incurred in the Interest of Personnel
t. Pension and Retirement Benefits
(1) General
(2) Charity Payments to Former Employees or Managers
u. Purchases
v. Profit-Sharing Plans
w. Payments to Foreign Residents in Privileged Tax Jurisdictions
x. Payments to Foreign Beneficiaries in Non-cooperative States or Territories
y. Difference Between Accounting and Fiscal Treatment of Certain Expenses
z. Waived Claims
5. Capital Expenditure
a. General
b. Incentives
6. Loss Carryovers and Carrybacks
7. Tax Credits
a. Foreign Tax Credits
b. Investment Tax Credits: Tax Credit for Foreign Client Research Costs
c. Tax Incentive for Competitiveness and Employment (Crédit d'Impôt pour la Compétitivité et l'Emploi, CICE)
d. Research and Development Tax Credit
e. Other Credits
(1) Apprentice Tax Credit
(2) Family Tax Credit
8. Tax Rates and Calculation of Taxable Income
9. Assessment and Filing
a. Filing of Tax Returns
b. Payment of Tax
c. Calculation and Payment of Balance
d. Tax Audit
(1) Standard Procedure
(a) “Oral” Phase
(b) Written Phase
(2) Special Procedures
(a) Self Adjustment (Regularisation Spontanée)
(b) Abuse of Law Procedure
(c) Unilateral Taxation
(d) Special Investigation Procedure (Article L16 B of the LPF)
(e) Remote Tax Audit (“Examen de Comptabilité à Distance”)
(3) Statute of Limitations
(4) Collection of the Tax Reassessment
(5) Tax Procedure — Litigation Stage
(a) Litigation Before the Tax Administration
(b) Litigation Before Courts
(c) Criminal Prosecutions for Tax Fraud
10. Incentives
a. Reduced Rates
b. Special Relief on Taxable Income
(1) New Businesses
(2) Free Urban Zones
(3) Corsica
(4) Financially Troubled Businesses
(5) Privileged Investment Zones
(6) Overseas Départements
(7) Venture Capital Companies
(8) Innovative Young Business
11. Tax Treatment of Reorganizations
a. General
b. Liquidation of a Corporation
(1) Reorganization Resulting in a New Fiscal Entity
(2) Conversion of a “Capital” Company into a “Personal” Company
(3) Conversion of a “Personal” Company into a “Capital” Company
c. Special Regime Applicable to Mergers, Splits, and Contributions of Assets
(1) Mergers and Takeovers
(a) Tax Incentives in the Case of Mergers
(b) Obligations of Absorbing Company
(c) Transfer of Absorbed Company's Tax Losses
(2) Company Splits and Partial Contributions of Assets
(3) Transfer of Seat
d. Change in Activity
C. Taxation of Dividends
1. Participation Exemption Regime
2. Withholding Tax on Dividends (Retenue à la Source)
D. Miscellaneous Taxes
1. Tax on Salaries (Taxe sur les Salaires)
2. Continuing Professional Training
3. Mandatory Investments in Housing Programs
4. Apprenticeship Tax
5. Tax on Buildings
6. Other Taxes
VII. Taxation of Foreign Corporations
A. General
B. Taxation of a Branch
1. Definition of Taxable Establishment
2. Determination of Taxable Income
3. Method of Taxation
4. Subsidiary vs. Branch
a. General
b. Related Costs and Formalities
c. Criteria for Choosing Branch or Subsidiary
(1) Fiscal Criteria
(2) Other Criteria
C. Taxation of a Foreign Corporation Without a Branch
1. Definition of Entities Subject to French Tax
2. Determination of Taxable Income
a. Ratio Method
b. Comparison Method
c. Commission Method
D. Foreign Companies with Real Property in France
1. Liability for the Payment of the Annual 3% Tax
2. Exemptions
E. European Headquarters of Foreign Companies
1. Definition of Headquarters
2. Taxation of Headquarters in France
VIII. Taxation of Partnerships
A. General Principles
B. Election for Corporate Income Tax
IX. Taxation of Other Business Entities
A. Family Corporations
B. Real Property Corporations
1. Co-Ownership Corporations
2. “Multi-Ownership” Companies
3. Listed Real Estate Investment Companies (Sociétés d' Investissement Immobilier Cotées)
C. Real Estate Development Companies
D. Finance Corporations and Mutual Funds
1. Real Property Companies for Commerce and Industry
2. Investment Companies with Variable Capital
3. Investment Companies with Fixed Capital
E. Nonprofit Associations
X. Taxation of Individuals — Residents
A. Scope of Taxation
1. Definition of “Taxpayer” for Income Tax Purposes
2. Definition of Tax Domicile
3. General Definition of Taxable Income
B. Types of Income
1. General
2. Determination of Net Income in Each Category
a. Real Property Income (Revenus Fonciers)
(1) Taxable Income
(2) Assessment and Filing
(3) Special Tax on High Rentals of Micro-Houses
(4) Preliminary Declaration for Short-Term Rentals
b. Industrial and Commercial Profits (Bénéfices Industriels et Commerciaux)
(1) Definition of “Bénéfices Industriels et Commerciaux”
(2) Assessment Period
(3) Determination of Tax Base — Filing
(a) Actual Income (Bénéfice Réel)
(b) Micro-Business Assessment
(c) Members of Approved Management Centers
(d) Filing and Summary of Regimes
c. Remuneration Received by Certain Corporate Officers
d. Agricultural Profits
e. Income from Salaries, Wages, Pensions and Annuities
(1) Assessment of Salaries and Other Taxable Income Treated as Salary
(a) Global Cap
(b) Cap of the Exemption of Activity Performed Abroad
(2) Social Welfare Contributions
(3) Pensions and Annuities
(4) Salary Substitutes
(5) Company Savings Schemes (Plan d'Épargne d'Entreprise)
(6) Stock Option Plans
(a) Qualifying Conditions
(b) Tax and Social Security Treatment
(i) Tax Treatment of Acquisition Gain
(ii) Tax Treatment of Sale Gain
(7) Distribution of Free Shares
(a) Qualifying Conditions
(b) Tax and Social Security Treatment
(8) Additional Pension Scheme (Retraite Chapeau)
(9) Deductions and Allowances
(10) Declaration and Filing
f. Noncommercial Profits (Bénéfices Non Commerciaux)
(1) Assessment of Noncommercial Profits Category Income
(a) Assessment: “Micro BNC”
(b) Assessment: Actual Basis
(c) Assessment: Special Basis
(2) Capital Gains in the Noncommercial Profits Category
(a) Small Businesses
(b) Normal Regime
(3) Returns
g. Securities Income
(1) Dividends and Deemed Distributions
(2) Fixed Income Debt Securities
(3) Insurance or Other Contracts Giving Rise to a Capital Sum
h. Capital Gains Realized by Individuals
(1) Real Property Transactions
(a) Transactions to which the Rules Apply
(b) Calculation of Taxable Gain
(c) Relief Based on Period of Ownership
(d) Disposition of Principal Residence Exemption
(e) Nonresident French Nationals and Nonresident Nationals of European Union Member States Exemption
(f) Other Exemptions
(g) Tax Returns
(h) Calculation and Payment of Tax
(2) Securities Transactions
(a) Unified Regime for Capital Gains or Losses from Securities Transactions
(b) Share Savings Account Scheme
(c) Tax Basis
(d) Rates of Tax
(e) Returns and Filing
(3) Exit Tax on Capital Gains on Participation Shares
(4) Dispositions of Personal Property
(a) General Principle
(b) Exemptions
C. Assessment Based on “External Signs of Wealth”
1. Calculation of Deemed Income
a. Place of Residence
b. Secondary Residence
c. Household Servants
d. Private Automobiles Less than 10 Years Old
e. Motorcycles with a Capacity in Excess of 450 cc
f. Yachts and Leisure Craft
g. Touring Aircraft
h. Race Horses
i. Riding Horses
j. Shooting Rights
k. Golf Club Membership
2. Conditions Precedent to the Application of Article 168
D. Unilateral Assessment on the Initiative of the Tax Authorities
1. Returns Filed Late or Not Filed
2. Failure to Provide Information or Supporting Evidence at the Request of the Administration
3. Failure to Appoint a Representative in France
E. Determination of Gross Taxable Income
1. Computation of Taxable Income
2. Allowances and Deductions from Gross Income
a. Support and Alimony Payments
b. Social Security Contributions
c. Assistance to the Elderly
d. Special Relief for Low-Income Elderly Persons and Invalids
e. Other Specific Allowances and Deductions
f. Family Quotient
(1) Calculating Number of Deductible “Parts”
(2) Dependents
3. Credits Allowable Against Gross Tax
a. Credits for Real Property
(1) Rental Property Tax Credit
(2) Major Equipment Credits
(a) Tax Credit in Favor of Sustainable Development
(b) Tax Credit for the Acquisition of Social Care Equipment
(3) Forest Credit
b. Premiums Paid on Certain Life Assurance Policies
c. Contributions to Charitable or Other Public Interest Institutions and Political Parties
d. Tax Credit or Reductions for Home Help
e. Capital Subscriptions in Small Business Companies
f. Miscellaneous Tax Credits
F. Rates and Calculation of Taxable Income
1. Rates of Tax
2. Tax Credits
3. Filing and Collection
4. Tax Audits and Statute of Limitations
G. Taxation of Expatriate Employees
H. Elective Regimes for Certain Kinds of Income
1. Debt Securities Income
2. Election for Certain Noncommercial Profits to Be Taxed as Salary Income
3. Capital Gains on Disposal of Personal Property Other Than Securities
XI. Taxation of Individuals — Nonresidents
A. General Principle
1. Tax Treatment of Nonresident with French-Source Income
a. Income Arising from Activity or Asset Located in France
b. Income Derived from a Debtor Domiciled in France
2. Attributed Income Resulting from Availability of Dwelling in France
a. General Principle
b. Exemptions
B. Method of Taxation
1. Principles of French-Source Income Taxation
2. Calculation of Tax Due
3. Withholding Taxes
a. Salaries and Similarly Treated Income, Pensions and Life Annuities
b. Nonsalary Income
c. Dividend Income
d. Directors’ Fees (Jetons de Présence)
e. Fixed Rate Securities Income
f. Capital Gains
(1) Stock Dispositions
(2) French Real Property Dispositions
g. Professional Real Property Trading Profits
C. Payment of Tax by Nonresidents
XII. Net Wealth Tax
Introductory Material
A. Persons Subject to the Tax
B. Calculation of Taxable Assets
1. “Nonbusiness” Assets
2. “Business” Assets (Biens Professionnels)
3. Assets Held in Trust
4. Rates of Taxation
C. Assessment and Filing
XIII. Inheritance and Gift Taxes
Introductory Material
A. Inheritance Tax
1. Territorial Scope
2. Declaration
3. Exemptions
4. Valuation of the Estate
a. Listed Securities
b. Furniture
c. Jewelry, Precious Stones, and Art Works
d. Monetary Debts Denominated in Foreign Currency
e. Usufructs and Bare Titles
f. Assets Held in Trust
g. Deductions
5. Calculation of Tax
6. Rate of Duty
a. Spouses and Partners in a Pacte Civil de Solidarité
b. Descendants or Ancestors
c. Collateral Relatives and Distant or Unrelated Parties
7. Payment of Inheritance Tax
B. Gift Tax
XIV. Registration Duties
Introductory Material
A. Sale of a Going Concern (Fonds de Commerce)
1. Definition of a Going Concern
a. Rate of Tax
b. Principal Exceptions
c. Payment
2. Deemed Sale of Fonds de Commerce
B. Real Property Sales
1. Normal Rates of Tax
2. Reduced Rates of Tax
a. Various Sales Subject to Reduced Rate
b. Professional Real Property Dealer Acquisitions
3. Sales Not Subject to Registration Duty but Subject to Value Added Tax
a. Building Land and Adjacent Property
b. Sales During Construction and Improved Property Sales
C. Corporate Transactions
1. Formation of a Corporation
a. Nature of Founder's Claim
b. Nature of Asset Contributed
2. Dissolution of a Corporation
a. Dissolution of Companies Not Liable to Corporate Income Tax
b. Dissolution of Companies Liable to Corporate Income Tax
3. Changes in a Company's Structure
a. Capital Increases
b. Capital Reductions
4. Dispositions of Certain Corporate Interests
a. In General
b. Other Regimes
5. Taxes on the Financial Sector
a. Financial Transaction Tax
b. Tax on High Frequency Trading
c. Tax on “Naked” Credit Default Swaps (CDS)
XV. Local Taxes
A. Regional Economic Contribution (Contribution Economique Territoriale)
1. Enterprises' Real Property Contribution (Cotisation Foncière des Entreprises)
a. Scope of the Enterprises' Real Property Contribution
(1) Persons Subject to the Tax
(2) Territorial Application
b. Exempted Persons and Activities
c. Tax Base
d. Rate of Tax
e. Filing and Payment of Tax
2. Enterprises' Added Value Contribution (Cotisation sur la Valeur Ajoutée des Entreprises)
3. Reduction of the Regional Economic Contribution
B. Real Property Tax
1. Unimproved Land
a. Permanent Exemptions
b. Temporary Exemptions
c. Tax Base
d. Rate of Tax
e. Payment of Tax
2. Improved Land
a. Land Subject to Tax
b. Temporary Exemptions
(1) New Buildings Exemption
(2) Other Exemptions
c. Tax Base
d. Rate of Tax
e. Returns and Payment of Tax
3. Provisions Common to Improved and Unimproved Land Taxes
C. Dwelling Tax (Taxe d'Habitation)
1. Liability for Tax
2. Tax Base
3. Rate of Taxation
4. Payment of Tax
D. Other Taxes
XVI. Value Added Tax
Introductory Material
A. General Principles
B. Taxable Transactions
1. Delivery of Goods and Supply of Services
2. Economic Activity
3. Consideration
4. Persons Within the Value Added Tax Framework: Assujettis
5. Exemptions
a. Exports and Related Transactions
b. Certain Imports
c. Certain Professions
d. Education
e. Certain Banking and Financial Operations
f. Insurance and Reinsurance Operations
g. Certain Real Property Rentals
h. Certain Real Property Transactions
i. Reimbursement of Expenses by the Members of Certain Forms of Association
j. Multi-Ownership Companies
k. Nonprofit Organizations
l. Transfer of Business
m. Miscellaneous
C. Territorial Application of Value Added Tax
1. Intra-European Union Transactions
2. Imports from Non-European Union Member States
3. Exports from the European Union to Third-Party Countries
4. Suspension of Value Added Tax
5. Services Relating to International Commerce
6. Annual Exemptions
7. Place of Delivery
a. French Territory
b. Relevance of the Place of Delivery: Goods
(1) General Principle
(2) Delivery of Goods After Assembly or Installation
c. Place of Taxation of Services
(1) General Principle
(2) Consequences for Business-to-Consumer and Business-to-Business Transactions
d. Exceptions
(1) Services Which Can Be Physically Localized
(a) Leased Chattels
(b) Real Property Services
(c) Transport of Persons
(d) Cultural, Artistic, Sporting, Scientific, Educational, Entertainment or Similar Services
(2) Intangible Property and Related Services
(3) Real Property
e. Subcontracted Consultancy Services
f. Temporary Personnel Used Abroad
g. Personnel Training for Foreign Entity
h. Transparent Intermediaries
i. B-to-C Transactions: E-commerce Services
D. Tax Base
1. General Rules
2. Exceptions
E. Value Added Tax Due Date
1. Sale of Tangible Goods
2. Supply of Services
3. Works Related to Real Property
4. Self-Delivery (Livraison à Soi-même)
5. Building Operations
6. Change of Value Added Tax Due Date
F. Rates of Value Added Tax
1. Reduced Rate — Products Concerned
2. Lodging Establishments
3. Meals Served in a Company Restaurant
4. Catering Services
5. Rental of Zoned Camping-Caravan Parks
6. Entertainment
7. Transportation of Travelers
8. Medicines
9. Books
10. Newspapers and Other News or Political Periodicals
G. Input Credits
1. General Principles
2. Availability of Input Credit Rights
a. Qualifying Requirements
b. Time at which Input Tax May Be Credited
c. Ownership and Use of Goods Requirements
d. Exclusions or Special Restrictions
3. Taxpayers Partially Liable to Value Added Tax
a. Recovery of Input Tax on Fixed Assets
b. Recovery of Input Tax on Services and Goods Other Than Fixed Assets
4. Methods of Recovering Input Tax
a. Deductions
b. Reimbursement of Nonutilized Credit Balance
c. Specific Reimbursement Procedure for Foreign Companies
H. Taxpayers' Obligations
1. Administrative Obligations and Formalities
2. Accounting Obligations
3. Invoice-Related Obligations
4. Appointment of a Tax Representative
I. Collection and Recovery
1. Declaration of Turnover and Payment of Tax
2. Penalties
XVII. Other Taxes
A. Parafiscal Taxes
1. Tax on Mineral Waters
2. Animal Slaughter House Tax
B. Other Taxes
1. Publishing Tax
2. Tax on Copying Machines
3. Company Social Solidarity Contribution and Additional Company Social Solidarity Contribution
4. Tax on Insurance Contracts
5. Tax on Currency Transactions
XVIII. Special Provisions Relating to Multinational Corporations: Anti-Tax Avoidance Measures
A. Inter-Company Pricing
1. Article 57 of the CGI
a. Principle
b. Demonstration of a Transfer of Profits in the Context of an Indirect Assessment According to French Case Law
2. Simplified Transfer Pricing Documentation (Form 2257-SD)
B. Country-by-Country Reporting (CBCR)
1. Country-by-Country Reporting for Tax Authorities
2. Public Country-by-Country Reporting
C. Mutual Agreement Procedure and the Arbitration Convention Procedure
1. The Mutual Agreement Procedure
2. The European Arbitration Convention Procedure
D. Tax Havens
E. Legislation Against Non-cooperative States and Territories
F. Anti-Tax Avoidance Measures
1. Deductibility of Payments to a Tax Haven or a Non-cooperative State or Territory: Article 238 A
2. Profits Deriving from a Tax Haven: Articles 209 B and 123 bis
a. Article 209 B
b. Article 123 bis
3. Payments Abroad in Consideration of Services Rendered by a French Resident Person or Entity: Article 155 A
4. Transfer of Assets Abroad
5. Tax Avoidance Measures Specifically Targeting Non-cooperative States or Territories
6. Declaration of Monetary and Other Transfers and Accounts Abroad
7. Declaration of Certain Insurance Policies
8. Requirement to Make Certain Payments by Check, Bank Draft or Credit Card
9. Transfer of Tax Domicile Abroad
G. Bilateral Agreement on the Implementation of FATCA Signed between France and the United States
XIX. Avoidance of Double Taxation
A. French Tax Law
1. Income Tax
2. Corporate Income Tax
3. Inheritance and Gift Taxes
B. Double Taxation Agreements
1. In General
a. Double Taxation Agreements with Respect to Taxes on Income
b. Double Taxation Agreements with Respect to Inheritance and Gift Taxes
c. Treaties on Other Matters
2. Double Taxation Agreements with Developed Countries
a. Individuals Able to Benefit Under a Double Taxation Agreement
b. Corporations Able to Benefit Under a Double Taxation Agreement
c. Permanent Establishment
d. Industrial and Commercial Profits
e. Dividends
(1) French-Source Dividends
(2) Foreign-Source Dividends
f. Interest
g. Royalties
h. Immovable Property Income
i. Techniques Employed to Eliminate Double Taxation
(1) Exemption of Given Category
(2) Tax Credits
3. Principal Differences Encountered in Double Taxation Agreements with Developing Countries
a. Corporations
b. Tax Sparing and Matching Credit
4. Tax Planning
C. Taxation and Exchange of Information Agreements with the United States
1. France-United States FATCA Intergovernmental Agreement
2. The France-United States Income Tax Treaty
a. Scope of Application
(1) French Resident
(2) United States Resident
(3) Dual Residence
b. Geographical Scope of Treaty
c. Business Profits
d. Calculation of Profits
e. Dividends
f. Interest
g. Royalties
h. Capital Gains
i. Independent Personal Services
j. Private Salaries and Remuneration
k. Artists and Athletes
l. Pensions
m. Public Body and Political Subdivision Salaries, Wages and Pensions
n. Teachers and Researchers
o. Students and Trainees
p. Net Wealth Tax
q. Relief from Double Taxation
r. Nondiscrimination
s. Mutual Agreement Procedure
t. Exchange of Information
u. Assistance in Collection
v. Limitation on Benefits (Anti-Abuse Provisions)
3. The France-United States Estate and Gift Tax Treaty
a. Scope of the France-United States Estate and Gift Tax Treaty
(1) Taxes Covered
(2) Estates and Gifts
b. Domicile
c. Allocation of Taxing Rights
(1) Real Property
(2) Permanent Establishment
(3) Movable Property
d. Exemptions and Deductions for Gifts and Legacies to Charitable Organizations
e. Methods for the Avoidance of Double Taxation
(1) France
(2) United States
(3) Procedure
f. Miscellaneous Provisions

Working Papers

Table of Worksheets
Worksheet 1 Reporting Form Concerning Direct Foreign Investment in France
Worksheet 2 Declaration of Liquidation of Investment in France
Worksheet 3 Form M0, Declaration of the Establishment of a Corporate Entity
Worksheet 4 Form P0, Declaration of the Establishment of a Personal Business Activity
Worksheet 5 SA Articles of Association
Worksheet 6 SARL Articles of Association
Worksheet 7 Form 2759, SA Share Transfer Form
Worksheet 8 Form 2065 and Attachments, Corporate Income Tax Return
Worksheet 9 Forms 2048-M and 2048-IMM, Nonresidents Capital Gains Return
Worksheet 10 Form 3005, Nonresidents Real Property Profits Return
Worksheet 11 Form 1447 M, Enterprises' Real Property Contribution
Worksheet 12 Form 1330, Enterprises' Added Value Contribution
Worksheet 13 Form 3310, Turnover and VAT Declaration
Worksheet 14 1994 France-United States Income and Capital Tax Treaty as amended by 2004 and 2009 Protocols
Worksheet 15 1978 France-United States Estate and Gift Tax Treaty as amended by 2004 Protocol
Worksheet 16 List of Countries with Which France Has In Force Income Tax Treaties and Other Tax-Related Agreements as of March 31, 2018
Worksheet 17 Tax Treaties Signed by France Eligible for the 3% Tax Exemption1
Worksheet 18 IRS News Release on United States-France Agreement on Taxation of French Social Security
Worksheet 19 List of Non-Cooperative States or Territories (NCSTs) for 2016