French General Tax Code
In forceI.-An allowance is applicable to capital gains, determined under the conditions set out in Articles 150 V to 150 VD, resulting from the transfer of built-up real estate or rights relating to the same property, located for all or part of their surface area within the perimeters of major urban planning operations set by the deed mentioned in second paragraph of article L. 312-4 of the town planning code or in the areas defined in the agreements mentioned in II of article L. 303-2 of the French Construction and Housing Code, on the twofold condition that the transfer:
is
1° Is preceded by a unilateral undertaking to sell or a synallagmatic undertaking to sell, signed and dated between 1 January 2021 and 31 December 2023 at the latest;
2° Completed no later than 31 December of the second year following the year in which the unilateral undertaking to sell or the formal agreement to sell became effective;
II.
II.For the purposes of applying the allowance referred to in I, the transferee undertakes, in a statement included in the deed of purchase, to demolish the existing building(s) and to build and complete, within four years of the date of purchase, one or more multi-family residential buildings with a floor area of at least 75% of the maximum authorised floor area as determined by the local urban development plan or equivalent urban development document.
III.
III -The rate of the allowance referred to in I is 70%
.
This rate is increased to 85% where the transferee undertakes to build and complete social or intermediate housing, as defined, respectively, in 3° et 5° de l'article L. 831-1 du code de la construction et de l'habitation et à l'article L. 302-16 du même code, dont la surface habitable représente au moins 50 % de la surface totale des constructions mentionnées sur le permis de construire du programme immobilier.
IV.
IV -The allowance referred to in I of this article does not apply to capital gains arising from sales made to:
1° A natural person who is the spouse of the transferor, the transferor's partner in a civil solidarity pact, the transferor's cohabiting partner or an ascendant or descendant of the transferor or one of these persons;
2° A legal entity of which the transferor, his spouse, his partner in a civil solidarity pact, his cohabiting partner or an ascendant or descendant of one of these persons is a shareholder or becomes one on the occasion of this transfer.
V.-In the event of a breach of the undertakings referred to in II and the second paragraph of III, the transferee is liable for a fine equal to 10% of the transfer price stated in the deed.
In the event of a merger of companies, the transferee is liable for a fine equal to 10% of the transfer price stated in the deed.
In the event of a company merger, the undertaking given by the transferee is not broken if the acquiring company undertakes, in the merger deed, to take the place of the acquired company in complying with the aforementioned undertaking within the time remaining. Failure by the acquiring company to comply with this undertaking will result in the application to that company of the fine provided for in the first paragraph of this V.
