French General Tax Code
In force1. Article 210 A applies to the partial contribution of assets of one or more complete branches of business or similar items.
The same Article 210 A applies to the demerger of a company comprising at least two complete branches of activity where each of the recipient companies receives one or more of these branches.
Contributions of shareholdings relating to more than 50% of the capital of the company whose securities are contributed or, if such a percentage of the capital is already held by the receiving company, contributions that increase this holding are treated as a complete branch of activity, provided that the contributing company complies with the rules and conditions set out in the third and fourth paragraphs of 7 bis of the article 38. The same applies, on the one hand, to contributions of shareholdings giving the company receiving the contributions the direct holding of more than 30% of the voting rights of the company whose securities are contributed when no other shareholder holds, directly or indirectly, a higher fraction of the voting rights and, on the other hand, to contributions of shareholdings giving the company receiving the contributions, which already holds more than 30% of the voting rights of the company whose securities are contributed, the highest fraction of the voting rights in the company.
1 bis. In the event of a partial contribution of assets of similar items mentioned in the last paragraph of 1 of this article, the contributing company is deemed to have held the securities provided as consideration for the contribution since the date on which it acquired the items contributed.
2. Capital gains on disposals relating to the securities provided as consideration for the contribution are calculated by reference to the value that the contributed assets had, for tax purposes, in the records of the contributing company.
The capital gains or losses generated on the securities distributed under the conditions provided for in Article 115(2) are not taken into account for the purposes of the corporation tax due by the transferring legal entity.
3. In the absence of the contribution of one or more complete branches of business or similar items, the provisions of article 210 A apply to partial contributions of assets and to demergers upon approval issued under the conditions provided for in article 1649 nonies.
Authorisation is granted when, taking into account the items that are the subject of the contribution:
a. The transaction is justified by an economic reason, reflected in particular by the exercise by the company receiving the contribution of an autonomous activity and the improvement of structures, as well as by an association between the parties formalised by a commitment to retain for three years the securities given as consideration for the contribution;
b. Article 210-0 A is complied with;
c. The terms of the transaction ensure the future taxation of the capital gains deferred.
For demerger transactions, the obligation to retain the securities referred to in a is only required of shareholders who hold in the demerged company, on the date of approval of the demerger, at least 5% of the voting rights or who exercise or have exercised in the six months preceding that date, directly or through their corporate officers or agents, management, administrative or supervisory functions and hold at least 0.1% of the voting rights in the company.
