French General Tax Code
In forceI. - Real estate investment funds are undertakings for collective real estate investment and professional undertakings for collective real estate investment, referred to in paragraph 3 of sub-section 2 of section 2 and in sub-paragraph 2 of paragraph 1 of sub-section 3 of section 2 of Chapter IV of Title I of Book II of the Monetary and Financial Code.
II. - 1. The taxable income and profits referred to in I of article L. 214-81 of the Monetary and Financial Code are determined by the management company of the real estate investment trust for the fraction corresponding to the rights of each unitholder liable for income tax who has not registered his units in his business assets, under the conditions provided for:
a) In Articles 14 A to 33 quinquies, for income falling within the property income category in respect of the assets mentioned in a of 1° of II of Article L. 214-81 of the Monetary and Financial Code;
b) In article 137 ter, for income falling within the category of income from movable capital in respect of the assets mentioned in b of 1° of II of the same article L. 214-81;
c) In articles 150 UC to 150 VH and article 244 bis A, for capital gains from the sale for valuable consideration of property and property rights mentioned in 2° of II of the same article L. 214-81 as well as for capital gains on the disposal of assets mentioned in the same 2°, when these assets are in the nature of real estate to which are allocated furnishings, equipment or goods allocated to these properties and necessary for the functioning, use or operation of the latter by a third party, mentioned in article L. 214-34 of the Monetary and Financial Code, provided that the unitholder is not considered to be acting in a professional capacity, within the meaning of IV of Article 155 of this code, on the due date for filing the declaration mentioned in Article 170 preceding the distribution of the capital gain;
d) In Article 150-0 F, for capital gains on the disposal for valuable consideration of assets mentioned in 3° of II of the same Article L. 214-81;
e) In article 35 A, for income in the industrial and commercial profits category in respect of the assets mentioned in a of 1° of II of article L. 214-81 of the French Monetary and Financial Code, which are in the nature of real estate to which are allocated furnishings, equipment or goods allocated to these properties and necessary for the functioning, use or operation of the latter by a third party, mentioned in article L. 214-34 of the same code;
f) In articles 39 duodecies to 39 quindecies and article 244 bis A of the present code, for capital gains on the disposal of assets mentioned in 2° of II of article L. 214-81 of the French Monetary and Financial Code, when these assets are in the nature of real estate to which are allocated furnishings, equipment or goods allocated to these properties and necessary for the functioning, use or operation of the latter by a third party, as referred to in article L. 214-34 of the same code, and when the unitholder is considered to be carrying on business on a professional basis, within the meaning of IV of article 155 of the present code. The basis of assessment for the capital gain is determined by the unit-holder by reintegrating the fractions of the theoretical depreciation of the buildings that he has deducted under the conditions provided for in the second paragraph of 2 of this II.
2. Holders of units in the real estate investment funds referred to in 1 are subject to income tax on the income and profits distributed by the fund in respect of the year in which the distribution takes place.
The income taxed under the conditions provided for in e of 1 means the income distributed, reduced by the positive difference between the fraction of the theoretical book depreciation of the properties and the fraction of the allowance applied by the fund pursuant to a of 1° of II of article L. 214-81 of the Monetary and Financial Code. These fractions are determined, for each unitholder, in proportion to its share of distributed income.
3. The provisions set out in h of 1° of the I of article 31, article 31 bis, the first paragraph of 3° of the I of article 156 relating to buildings listed or registered as historic monuments or having received the label issued by the Fondation du patrimoine, articles 199 decies E to 199 decies G bis, article 199 undecies A, article 199 tervicies, to article 199 septvicies and to 1° to 3° and 6° of II of article 200 quindecies are not applicable when the properties, property rights or shares are held directly or indirectly by property investment funds other than those resulting from the transformation of non-trading companies mentioned in article 239 septies and for which the application of these provisions was requested before the deadline for filing 2006 tax returns.
III. - For the other unitholders, the income and profits mentioned in I of article L. 214-81 of the Monetary and Financial Code are taxed on the date of their distribution for the fraction corresponding to their rights.
