French General Tax Code
In forceI. - Insurance and reinsurance companies are authorised to set aside, free of tax, a provision relating to their credit insurance operations other than those carried out for export on behalf of the State or with its guarantee.
II. - The annual allocation made to the provision provided for in I is limited to 75% of the amount of underwriting profit net of reinsurance cessions made by the company in the credit insurance branch.
III. - The total amount reached by the provision provided for in I may not, each year, exceed 134% of the annual average of premiums or contributions, net of reinsurance cessions, collected during the five preceding financial years by the undertaking.
IV. - For the purposes of this article, underwriting profit is defined as the difference between:
on the one hand, the amount of premiums earned during the financial year less allocations to provisions legally constituted;
on the other hand, the amount of claims expenses less income from recoveries, to which are added expenses directly attributable to the credit insurance branch and a share of other expenses.
Sums credited to taxable profit pursuant to V are not taken into account when calculating the 75% limit provided for in II.
V. - Each provision is allocated, in the order of age of the annual allocations, to offsetting underwriting losses for the financial year. Annual allocations which have not been used for this purpose within ten years are deducted from taxable profits in the eleventh year following the year in which they were recorded.
VI. - The conditions for recording, declaring and applying this provision, particularly with regard to determining technical profit, are set by decree in the Conseil d'Etat (1).
(1) See articles 16 E and 16 F of Appendix II.
