32°: Tax credit for students to finance their higher education

I. - Loans taken out between 1 September 2005 and 31 December 2008 with a view to financing their studies by persons aged no more than twenty-five and enrolled in a course of higher education entitle them to an income tax credit in respect of the loan interest paid by these persons in respect of the first five annual repayments.

Interest on loans that are allocated to the repayment in whole or in part of other loans or overdrafts on account or that are used to determine categorical taxable income do not qualify for the tax credit.

The loans referred to in the first paragraph are those defined in articles L. 311-1 to L. 311-3 of the Consumer Code with the exception of:

a) Sales or services for which payment is staggered, deferred or split;

b) Credit facilities referred to in Article L. 311-16 of the same code;

c) Account overdrafts;

d) Hire-purchases and leases with a purchase option.

The provisions of the third to seventh paragraphs apply under the same conditions to loans which, taken out in another 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 with a view to combating tax fraud and evasion, comply with equivalent regulations.

II. - The tax credit is equal to 25% of the amount of annual interest actually paid, up to a limit of €1,000. It is allocated from the year in respect of which the subscriber of the loan constitutes a separate household.

Interest paid during the period in which the loan subscriber was attached to another tax household pursuant to 2° and 3° of 3 of the article 6 are entitled to the tax credit in the year from which that person becomes a taxpayer. The tax credit is then equal to 25% of the interest actually paid during the period concerned, up to a limit of €1,000 per calendar year of repayment.

III. - The tax credit is deducted from income tax after deducting the tax reductions mentioned in articles 199 quater B to 200 bis, tax credits and non-dischargeable levies or deductions. If it exceeds the tax due, the excess is refunded.

IV. - Persons who do not have their tax domicile in France do not benefit from the tax credit.

V. - The conditions of application of this article and in particular the obligations of lenders and borrowers shall be set by decree.