French General Tax Code
In forceI. - As an exception to the provisions of articles 38, 238 septies B and 238 septies E, when insurance and capitalisation companies, supplementary professional retirement funds mentioned in Article L. 381-1 of the Insurance Code, the supplementary professional retirement mutuals or unions referred to in Article L. 214-1 du code de la mutualité or the institutions for supplementary professional retirement mentioned in article L. 942-1 of the Social Security Code purchase or subscribe to debt securities negotiable on a regulated market, or bond securities other than index-linked bonds, units in debt securitisation funds and participating securities, for a price different from their redemption price, the loss or profit corresponding to this difference is, for the purposes of determining the company's taxable income, spread over the period remaining until redemption. Where several redemption dates are provided for, the most distant date is used.
This allocation is carried out on an actuarial basis so that at the close of each financial year, the book value of the securities taking into account this allocation is equal to their current value calculated at the actuarial rate of return determined at the time of their acquisition.
For the application of these provisions, the purchase price of the securities is understood to exclude accrued interest.
At the close of each financial year, the cost price of the securities is increased or decreased, as appropriate, by the fraction of the profit or loss included in the taxable income.
II. - Securities subject to the provisions of I may not be the subject of a provision for depreciation.
III. - The provisions of this article apply to the determination of income for financial years commencing on or after 1 January 1992.
Securities acquired during a previous financial year are deemed, for the calculation of the actuarial rate of return referred to in the second paragraph of I, to have been acquired on 1 January 1992, their residual life also being assessed on that date. The profit or loss to be allocated in application of I is determined on the basis of the purchase price of these securities; the provisions for depreciation relating to these securities are reintegrated into the taxable income of the first financial year in which this allocation is applied. However, companies may choose not to apply the provisions of I to these securities if their purchase price is lower than their redemption price; the choice thus made applies to all securities acquired before that date.
