2: Tax fines

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Article 1763 B

French General Tax CodeIn force
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Updated 7 Nov 2023

1. The management company of a fonds commun de placement à risques or of a fonds professionnel de capital investissement or the manager of a société de libre partenariat which has included in the declaration provided for in I of Article 242 quinquies erroneous information leading to the concealment of non-compliance with the 50% quota provided for in 1° of II of Article 163 quinquies B is liable to a tax fine equal to 5% of the value of the investments entered on the aforementioned declaration and wrongly included in the 50% investment quota or for the calculation of the limit provided for in III of article L. 214-28 of the Monetary and Financial Code. The amount of this fine is reduced by an allowance equal to the proportion of the amount of subscriptions made by persons who do not have their tax domicile or registered office in France to the amount of subscriptions issued by the fund. This proportion is determined on the first day of each financial year. The amount of the fine is capped, per declaration, at half the amount of the sums owed to it by the fund in respect of management fees for the financial year concerned.

A venture capital company that has included erroneous information on the statement provided for in II of Article 242 quinquies leading to the concealment of non-compliance with the 50% quota provided for in the third paragraph of 1° of Article 1-1 of Law no. 85-695 of 11 July 1985 containing various economic and financial provisions shall be liable for a tax fine equal to 5% of the value of the investments entered on the aforementioned declaration and wrongly included in the 50% investment quota or for the calculation of the limit provided for in the fourth paragraph of 1° of the aforementioned Article 1-1. The amount of this fine is capped, per declaration, at half the amount of the venture capital company's operating expenses for the financial year in question.

1 bis. The management company of a fonds commun de placement à risques or a fonds professionnel de capital investissement or the manager of a société de libre partenariat who has entered information on the declaration provided for in I of Article 242 quinquies that leads to an erroneous application of 2° of 5 of the article 38 or a sexies du I de l'article 219 is liable for a tax fine equal to 5% of the amount of the distribution concerned. The amount of this fine is reduced by an allowance equal to the proportion of the amount of subscriptions made by persons who do not have their tax domicile or registered office in France to the amount of subscriptions issued by the fund. This proportion is determined on the first day of each financial year. The amount of the fine is capped, per declaration, at half the amount of the sums owed to it by the fund in respect of management fees for the financial year concerned.

A venture capital company that has entered information on the statement provided for in II of Article 242 quinquies that leads to an erroneous application of Article 39 terdecies 5 or Article 219 I a sexies is liable for a tax fine equal to 5% of the amount of the distribution concerned. The amount of this fine is capped, per declaration, at half the amount of the venture capital company's operating expenses for the financial year concerned.

2. If the declaration or statement provided for in Article 242 quinquies is not filed within the prescribed period, the administration shall send, by registered letter with acknowledgement of receipt, a formal notice to file the aforementioned declaration or statement within thirty days.

If the document is not filed within thirty days of receipt of this formal notice, the fund management company or the venture capital company is liable for a fine equal to half the amount of the sums that are owed to the management company by the fund in respect of management fees or half the amount of the operating expenses of the venture capital company for the financial year concerned.

Mariela Petrova

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Mariela Petrova

Mariela Petrova

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15+ Years In Corporate Practice

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