I: Taxable income

I. Individuals who undertake to hold units in venture capital mutual funds or professional investment funds for at least five years from the date of their subscription are exempt from income tax on the sums or securities to which the units concerned entitle them.

The provisions of the first paragraph do not apply to holders of units in venture capital mutual funds or specialised professional funds covered by Article L. 214-37 of the Monetary and Financial Code as it stood prior to l'ordonnance n° 2013-676 du 25 juillet 2013 modifiant le cadre juridique de la gestion d'actifs ou de fonds professionnels de capital investissement donnant lieu à des droits différents sur l'actif net ou sur les produits du fonds et attribuées en fonction de la qualité de la personne.

II. The exemption is subject to the following conditions:

1° In addition to the conditions set out in articles L. 214-28 and L. 214-160 of the Monetary and Financial Code, the securities taken into account directly in the 50% investment quota must be issued by companies which have their registered office in a Member State of the European Union, or in another State party to the Agreement on the European Economic Area which has concluded an administrative assistance agreement with France to combat tax fraud and tax evasion, which carry on an activity mentioned in the article 34 and which are subject to corporation tax under the conditions of ordinary law or would be subject to corporation tax under the same conditions if the activity were carried out in France;

1° bis (repealed);

1° ter (repealed);

1° quater The securities mentioned in I or III of article L. 214-28 of the Monetary and Financial Code, issued by companies whose registered office is in a Member State of the European Community, or in another State or territory that has concluded a tax treaty with France that contains an administrative assistance clause to combat tax evasion or avoidance, which are liable for corporation tax under ordinary law or would be liable for corporation tax under the same conditions if the business were carried on in France, and whose main purpose is to hold financial investments.

These securities are included in the 50% investment quota and for the calculation of the 20% limit stipulated in III of the aforementioned Article L. 214-28 in proportion to the direct or indirect investments, via the companies mentioned in the first paragraph, of the assets of the company issuing these securities in companies that meet the conditions stipulated in 1°. The procedures for determining this proportion are set by decree in the Conseil d'Etat;

1°d Rights representing a financial investment in an entity mentioned in 2° of II of Article L. 214-28 of the Monetary and Financial Code, incorporated in a Member State of the European Community, or in another State or territory that has concluded a tax treaty with France that contains an administrative assistance clause to combat tax evasion or avoidance, are also taken into account when calculating the 50% investment quota provided for in 1°.

These rights are included in the 50% investment quota and for the calculation of the 20% limit stipulated in III of the aforementioned article L. 214-28 in proportion to the direct or indirect investments, via companies mentioned in the first paragraph of 1° quater, of the assets of the entity concerned in companies which meet the conditions stipulated in 1°. The procedures for determining this proportion are laid down by decree in the Conseil d'Etat;

2° The sums or securities distributed must be immediately reinvested in the fund and remain unavailable for the period referred to in the first paragraph of I ;

3° The unitholder, his or her spouse and their ascendants and descendants must not together hold directly or indirectly more than 25% of the rights in the profits of companies whose securities are included in the assets of the fund or have held this amount at any time during the five years preceding the subscription of the fund's units or the contribution of the securities.

III. Amounts or values that have been exempt from income tax under I or III bis are added to the taxable income of the year in which the fund or the taxpayer ceases to meet the conditions set out in I and II or I and III bis.

However, the exemption is maintained in the event of the transfer of shares by the taxpayer when he or she or one of the spouses subject to joint taxation is in one of the following cases: disability corresponding to classification in the second or third of the categories provided for in the article L. 341-4 of the Social Security Code, death, retirement or redundancy.

III bis.-The exemption referred to in I also applies to venture capital mutual funds that meet all the conditions mentioned in article L. 214-30of the Monetary and Financial Code. This exemption applies subject to unit-holders complying with the conditions set out in I and in 2° and 3° of II of this article.

IV. A decree sets out the obligations incumbent on unit holders and fund managers and custodians.