French General Tax Code
In forceI. - Capital gains realised up to a date to be set by decree (1), but no earlier than 1 January 1972, by companies subject to income tax as industrial and commercial profits or corporation tax, on the disposal of buildings which they have built or had built and which do not qualify as fixed assets within the meaning of Article 40, may nevertheless benefit from the provisions of that Article where they relate to buildings used for residential purposes for at least three quarters of their total surface area and the construction of which had been completed on the date of disposal (2).
However, the amount of the sum to be reinvested is, where applicable, determined after deduction of sums borrowed for the construction or acquisition of the transferred items and not yet repaid on the date of the transfer.
On the other hand, subject to the penalties provided for in Article 40(4), the corresponding reinvestment must be compulsorily made either in the construction of properties allocated to residential use for at least three-quarters of their total surface area, or in the purchase of land for which a commitment to build provided for in I of A of article 1594-0 G has been subscribed, or in the subscription of shares or units in companies whose main purpose is to contribute directly or indirectly to the construction of buildings under conditions set by an order of the Minister of the Economy and Finance (3). In the event that the re-investment having been made in the purchase of land, the conditions set out in A of article 1594-0 G have not been met, the capital gain is carried forward to the profits of the current financial year on expiry of the period set out in the said article.
Subject to exceptions which may be provided for by decree (4), capital gains arising from sales preceded by payments on account or advances made for whatever reason, directly or through an intermediary, are excluded from the benefit of the provisions of this paragraph.
For the application of this paragraph, sales of properties in the future state of completion may be treated as sales of completed properties under conditions which are set by decree (5).
II. - The capital gains referred to in I may benefit from the provisions of Article 41.
They may also be placed under the exemption system provided for in Article 210, in the event of a merger of companies or similar transactions meeting the conditions provided for in 2 of the said Article 210.
III. - (Expired).
(1) Annex III, art. 10 H bis and 46 quater-0 R.
(2) See Annex II, art. 165.
(3) Annex IV, art. 23 J and 23 K.
(4) Annex II, art. 168.
(5) Annex II, art. 166,167 and 169.
