Christine Servey, lecturer at EM Strasbourg, has published an article in issue 589 of Revue Française de Comptabilité, published by the Conseil National de l'Ordre des Experts Comptables.
This article, entitled "La jurisprudence requalifie certaines quotes de frais et charges," is aimed primarily at professionals. It presents the corporate income tax exemption regimes for dividends and capital gains on the disposal of securities, incorporating recent developments in case law and the latest instructions from Bercy. The article also highlights the resulting opportunities for companies.
Abstract:
Tax exemption schemes for dividends and capital gains on the disposal of securities: case law sheds different light on the nature of the shares to be added back.
In France, corporation tax is based on net income, i.e., accounting income less expenses. Symmetrically, consistency would dictate that the exemption of an income should entail the non-deductibility of related expenses. However, a parent company may be exempted from corporation tax on dividends received or capital gains realized on the disposal of securities, provided that it adds back to its tax base 5% or 12% respectively of the exempted sums. Does this mean that these lump-sum payments cover all reintegration obligations? While the CE confirmed this analysis in the case of dividends, it rejected it in the case of disposal of securities. The result of these different rulings is both constraints and opportunities for companies subject to corporation tax.
Read the article [Fr]