Companies

Tax on shares transfer
The French law for the modernization of the Economy (LME) has changed the rates for shares transfer. From now on, the rate is set at 3% for all types of companies (instead of 1.1% for stock companies and 5% for other companies) except those mainly dedicated to real estate for which the rate remains set at 5%. Taxation is now limited to Euro 5,000 instead of 4,000 for stock companies’ shares transfers but no limit applies for other companies’ shares.

1.1% duty on capital reductions
In a decision made on September 23rd 2008, the French Supreme Court has decided that the 1.1% duty is not applicable to a capital reduction occurring during a French company’s lifetime and which does not involve its dissolution. The decision concerns capital reductions that are not motivated by losses. Thus, capital reductions that are not motivated by losses should in the future be registered at the fixed rate of Euro 125. French companies which paid the 1.1% duty on such capital reduction in the past are advised to claim back such duty before the applicable statute of limitations expires, i.e. before December 31st of the second year following the year in which the duty was unduly paid.

Advance reimbursement of a carry-back receivable
Under the news provisions of the 2009 tax bill, a company can now claim in 2009 the immediate reimbursement of the carry-back receivable relating to any tax year closed until September 30th 2009.
Previously, a claim related to the tax-loss carry back option could only be used to pay tax on income over the next 5 years, whereas the balance was only reimbursable at the end of this 5-year period.

Refund of R&D credits
The French government has announced that any outstanding tax credits for research and development expenditure that companies have not yet been able to set off against corporate tax will be refunded immediately in 2009. Normally, R&D credits are set off against corporate tax, but companies with insufficient tax liabilities to absorb the credits have them refunded after three years.

Territoriality of the registration duty on disposal of shares in real estate companies
In a decision made on September 4th 2008, the French Court of Grasse upheld the position of the Court of Nice with respect to the territorial scope of Article 726 of the French Tax Code relating to the French registration duty of 5% on disposal of shares in real estate companies. Indeed, it has been decided that the transfer of shares in a foreign real estate company having its assets mainly constituted by real estate located in France is exempt from French registration duty if the deed was not signed in France. The decisions of both Courts contradict the position of the French Tax Administration, formalized in a ruling dated October 14th 2008. The final outcome is expected to be determined by the Supreme Court.

Foreign company with real management headquarters in France
In a decision dated March 10th 2008, the French administrative Court of Bordeaux has decided that a Portuguese company had real management headquarters in France, and had to be considered as a resident of France although its registered head office was located in Portugal, country of incorporation of the company. The French Court justifies its position considering the lack of a permanent presence in Portugal.

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