2°: Professional capital gains

I. Capital gains realised on fixed assets are subject to the regime of articles 39 duodecies to 39 novodecies.

The long-term capital gains or losses regime provided for in Article 39 quindecies is applicable to income received by an inventor who is an individual and his successors in title in respect of the transfer or grant of operating licences for software protected by copyright, a patentable invention or an intangible asset which satisfies the conditions mentioned in 1°, 2° or 4° of I of Article 238. By way of derogation from the first paragraph of I of article 39 quindecies, the rate applicable to the transactions mentioned in this paragraph is 10%.

I bis. (Repealed for royalties taken into account from 1st January 2002 in the results of grantors and concessionaires).

I ter. Taxation of the capital gain realised on the contribution by a natural person inventor of copyright protected software, a patentable invention or an intangible asset which satisfies the conditions mentioned in 1°, 2° or 4° of I of article 238 to a company responsible for exploiting it may, at the express request of the taxpayer, be deferred until the sale, redemption, cancellation or transfer free of charge of the company rights received as consideration for the contribution or, if this occurs earlier, until the sale by the company receiving the contribution. The tax deferred capital gain is reduced by a deduction of one third for each year that the rights received as consideration for the contribution have been held beyond the fifth.

The tax deferral provided for in the first paragraph is maintained in the event of an exchange of the corporate rights referred to in the same paragraph resulting from a merger or demerger until the sale, redemption, cancellation or transfer for no consideration of the corporate rights received at the time of the exchange.

In the event of a free transfer to an individual of the corporate rights received as consideration for the contribution or received in the exchange referred to in the second paragraph, the deferral of taxation is maintained if the beneficiary of the transfer undertakes to pay the capital gains tax on the sale, redemption, cancellation or free transfer of the corporate rights.

Article 151 septies does not apply where the option provided for in the first paragraph is exercised.

The provisions of the sixth paragraph of II of article 151 octies are applicable to capital gains whose taxation is deferred pursuant to the first paragraph or whose deferral is maintained pursuant to the second or third paragraphs.

II.The taxation of capital gains arising from the contribution by a partner of the clientele or assets allocated to the exercise of his profession, to a professional non-trading company, formed in accordance with the provisions of the loi n° 66-879 du 29 novembre 1966 modifiée, is postponed until the transfer or redemption of the partner's corporate rights.The application of this provision is subject to the condition that the contribution is made within ten years of the publication of the decree in the Conseil d'Etat specific to the profession in question.

However, the deferral of taxation provided for in the first paragraph is maintained in the case of transactions subject to the provisions of I of the'article 151 octies A or the conversion of the non-trading company (société civile professionnelle) into a liberal practice company (société d'exercice libéral) until the date of transfer, redemption or cancellation of the partner's units or shares. The provisions of the sixth paragraph of II of article 151 octies are applicable to the partner as from the completion of the transactions subject to the provisions of I of article 151 octies A or the conversion of the société civile professionnelle into a société d'exercice libéral.

The provisions of the first paragraph do not apply to capital gains recorded on the occasion of contributions to companies referred to in I and II of article 151 octies.

III. For the application of the provisions of the first paragraph of I, leasing contracts entered into under the conditions provided for in 1 and 2 of Article L. 313-7 of the Monetary and Financial Code are considered as fixed assets when the rents paid have been deducted to determine the non-trading profit.

IV. 1. For the application of the provisions of the first paragraph of I to properties acquired under the conditions provided for in Article 93(6) and previously sublet, taxation of the capital gain resulting from the change in tax regime may, at the express request of the taxpayer, be deferred until the transfer of the property or, where applicable, the transfer or redemption of all or part of the shares in the company owning the property or its dissolution.

2. This provision applies to capital gains realised from 1 January 1990.

3. The deed recording the transfer of ownership of the properties referred to in 1 following acceptance of the unilateral undertaking to sell must state whether the new owner, or the partners if it is a company, request deferral of taxation of the capital gain under the conditions set out in 1.Failing this, the provisions of 1 do not apply.

4. A decree sets out the conditions for the application of this IV, in particular the taxpayers' reporting obligations.

V. The provisions of 5 bis and 7 bis of the'article 38 are applicable to the profit or loss realised on the exchange of securities resulting from the transactions referred to in the aforementioned 5 bis and 7 bis, where these securities are allocated to the exercise of the profession within the meaning of article 93.

Persons placed under the regime provided for in the first paragraph are subject to the obligations defined in Article 54 septies.