French General Tax Code
In force1. The following are allowed as deductions:
1° In the case of sociétés coopératives de consommation, bonuses arising from transactions with members and distributed to the latter in proportion to the order of each of them;
2° In the case of sociétés coopératives de production, the share of net profits which is distributed to workers under the conditions provided for in 3° of article 33 of law no. 78-763 of 19 July 1978 on the status of sociétés coopératives de production;
3° (Repealed) ;
4° (Provision obsolete);
5° As regards sociétés d'intérêt collectif agricole, bonuses from transactions with cooperative members and distributed to the latter in proportion to their activities.
This provision does not apply to sociétés d'intérêt collectif agricole where the members referred to in Article L. 522-1 of the Rural and Maritime Fishing Code, credit institutions and finance companies hold directly or through their subsidiaries 80% or more of the capital or votes and the members referred to in 1°, 2° and 3° of the same article hold less than 50% of the capital or votes ;
6° Any fraction of the rebates deducted pursuant to 1°, 2° and 5° which exceeds 50% of the distributable surpluses of a financial year is reintegrated into the result of the same financial year up to the amount of the sums contributed or made available to the cooperative by the beneficiaries during the two following financial years ;
7° The provisions of 1° and 2° do not apply to companies in which more than 50% of the capital is held by non-cooperating members, as defined in 1 quinquies of l'article 207, and holders of cooperative investment certificates or cooperative shareholder certificates, with the exception of cooperative production companies the majority of whose capital is held by another cooperative production company under the conditions set out in article 25 of law n° 78-763 of 19 July 1978 on the status of sociétés coopératives de production;
The 2° is however applicable to sociétés coopératives de production resulting from the transformation of other companies under the conditions provided for in articles 48 to 52 of the aforementioned law no. 78-763 of 19 July 1978 and for which the non-cooperating members undertake, at the time of conversion and under conditions laid down by decree, to transfer a sufficient number of shares to enable the cooperating members to hold at least 50% of the company's capital by 31 December of the seventh year following the year of conversion into a société coopérative de production.
The 2° is also applicable to sociétés coopératives de production which have set up between themselves a grouping covered by the articles 47 bis to 47 septies of the aforementioned law n° 78-763 of 19 July 1978 and the majority of whose capital is held by one or more cooperative companies which are members of this grouping or by employees employed by the other cooperative companies which are members of this grouping.
In the event of non-compliance with the undertaking referred to in the second paragraph, the company reports against the taxable income for the financial year in progress or closed on 31 December of the seventh year following that of the conversion into a société coopérative de production an amount corresponding to the distributions deducted. The corresponding duties are increased by the late payment interest provided for in article 1727, deducted from the financial year in which the distributions were deducted;
8° With regard to employer groups operating under the conditions provided for in articles L. 1253-1 to L. 1253-19 of the Labour Code, sums not exceeding 2% of the amount of remuneration, as defined in article L. 242-1 of the Social Security Code, paid to their employees or €10,000 in respect of the same financial year.
This deduction is subject to the condition that, at the end of the financial year, the group has booked to a special allocation account opened with a credit institution a sum from the income for the financial year at least equal to the amount of the deduction. The savings must be entered on the assets side of the balance sheet.
Sums deposited in the account may be used during the five financial years following the year in which they were paid as part of the joint and several liability provided for in article L. 1253-8 of the Labour Code.
When the sums deposited in the account are used for the purpose provided for in the previous paragraph, the corresponding deduction is carried forward to the profit or loss for the financial year during which the withdrawal took place.
When the sums deposited in the account are not used during the five financial years following that in which they were paid, the corresponding deduction is carried forward to the results of the fifth financial year following that in respect of which it was made.
When the sums deposited in the account are used for purposes other than those defined above during the five financial years following the financial year in which they were deposited, all the deductions corresponding to the sums in the account on the day they were used are carried forward to the profit or loss for the financial year in which they were used. The aforementioned account is a current account that exclusively records the transactions defined above.
1 bis. Where a company exercises the option for the group regime mentioned in article 223 A or article 223 A bis, the provisions of 1 are not applicable for the determination of the results of the financial years closed during the five-year period from the opening date of the first financial year in respect of which it has exercised this option.
The sums mentioned in 1°, 2° and 5° of 1 not deducted pursuant to the first paragraph retain the character of rebates for the persons receiving them.
2. and 3. (Obsolete provisions).
