Tax Reduction Granted For The Purchase Of A Company By Its Employees
I. Taxpayers domiciled for tax purposes in France may benefit from a reduction in their income tax equal to 25% of cash subscriptions to the initial capital or to increases in the capital of companies.
The tax advantage applies when the following conditions are met:
a) The company’s shares are not admitted to trading on a French or foreign regulated market;
b) When the main purpose of the company is to hold participations in other companies within the meaning of the third paragraph of ab of I of article 219, they must themselves comply with all the conditions mentioned in this I;
c) the company is subject to corporation tax under the conditions of ordinary law;
d) in the event of a capital increase, the company’s turnover excluding tax did not exceed 40 million euros or the balance sheet total did not exceed 27 million euros during the financial year. Previous exercice. For the assessment of these limits, account is taken of the turnover and the balance sheet total of the companies in which the company directly or indirectly holds a stake within the meaning of the third paragraph of ab of I of article 219, in proportion to the stake held in these companies;
e) more than 50% of the social rights attached to the shares or shares of the company are held directly, either only by natural persons, or by one or more companies formed only of relatives in direct line or between brothers and sisters as well as between spouses, the sole purpose of which is to hold shares in one or more companies meeting the conditions of c and d.
The condition provided for in the first paragraph is not required in the event of subscription to the capital of joint ventures within the meaning of Article L. 443-3-1 of the Labor Code.
II. Payments giving rise to the tax reduction mentioned in I are those made until December 31, 2006. They are retained within the annual limit of 20,000 euros for single, widowed or divorced taxpayers and 40,000 euros for taxpayers. married couples subject to joint taxation.
The fraction of a year exceeding, if applicable, the limits mentioned in the first paragraph gives entitlement to the tax reduction under the same conditions for the following three years.
III. Subscriptions giving rise to the deductions provided for in 2 ° quater of article 83, articles 163 septdecies and 163 duovicies or to the tax reduction provided for in article 199 undecies A as well as subscriptions financed by means of financial assistance of the State exempt in application of 35 ° of article 81 and the subscriptions to the capital of sole-personal risk investment companies referred to in article 208 D do not give rise to the right to the tax reduction mentioned in I .
The shares or units whose subscription gave rise to the right to the tax reduction cannot appear in a share savings plan defined in article 163 quinquies D or in a savings plan provided for in Chapter III of the title. IV of Book IV of the Labor Code.
IV. The provisions of 5 of I of article 197 are applicable.
When all or part of the shares or units that gave rise to the reduction are sold before December 31 of the fifth year following that of the subscription, a reversal of the tax reductions obtained is carried out for the year of the sale. , within the limit of the sale price. The same provisions apply in the event of reimbursement of cash contributions to subscribers.
These provisions do not apply in the event of dismissal, disability corresponding to classification in the second or third of the categories provided for in Article L. 341-4 of the Social Security Code or the death of the taxpayer or the ‘one of the spouses subject to joint taxation.
When the taxpayer obtains on his request, for a subscription, the application of the deduction provided for in article 163 octodecies A or opts for the exemption mentioned in 7 of III of article 150-0 A, a resumption of the reductions tax obtained for this same subscription is applied for the year of the deduction or option.
V. A decree fixes the modalities of application of this article, in particular the reporting obligations incumbent on taxpayers and companies.
VI. 1. Taxpayers domiciled for tax purposes in France may benefit from a reduction in their income tax equal to 25% of cash subscriptions of shares in innovation mutual funds mentioned in Article L. 214-41 of the monetary and financial code when the following conditions are met:
a. individuals undertake to keep fund units for at least five years from their subscription;
b. the unitholder, his spouse and their ascendants and descendants together must not hold more than 10% of the shares. 100 of the fund’s shares and, directly or indirectly, more than 25%. 100 of the rights in the profits of companies whose securities appear in the assets of the fund or have held this amount at any time during the five years preceding the subscription of the units of the fund or the contribution of the securities.
2. Payments giving rise to the tax reduction mentioned in 1 are those made until December 31, 2006. Payments are withheld within the annual limits of 12,000 euros for single, widowed or divorced taxpayers and 24,000 euros. for married taxpayers subject to joint taxation.
3. The tax reductions obtained are the subject of a reversal for the year during which the fund or the taxpayer ceases to meet the conditions set out in Article L. 214-41 of the Monetary Code and financial and 1. This provision does not apply, for transfers of shares made before the expiry of the retention period for shares provided for in 1, in the event of dismissal, disability corresponding to the classification in the second or third of the categories provided for in Article L. 341-4 of the Social Security Code or of the death of the taxpayer or of one of the spouses subject to joint taxation.
VI bis. – The provisions of 1 and 3 of VI apply to cash subscriptions of shares in local investment funds mentioned in Article L. 214-41-1 of the Monetary and Financial Code. The payments giving rise to the right to the tax reduction are those made until December 31, 2006. They are retained within the annual limits of 12,000 Euros for single, widowed or divorced taxpayers and of 24,000 Euros for married taxpayers subject to common taxation. The tax reductions provided for in VI and VI bis are mutually exclusive for subscriptions to the same fund.
These provisions do not apply to units in local investment funds giving rise to different rights on the net assets or on the products of the fund, allocated according to the quality of the person.
VII. A decree sets out the modalities of application of VI and VI bis, in particular the reporting obligations incumbent on unitholders as well as on fund managers and custodians.
I. – Taxpayers domiciled for tax purposes in France within the meaning of Article 4 B may benefit from a reduction in their income tax equal to 25% of the amount of interest on loans contracted to acquire, as part of a transaction recovery, a fraction of the capital of a company whose securities are not admitted to trading on a French or foreign regulated market.
This tax reduction applies when the following conditions are met:
a) The purchaser undertakes to keep the shares of the company taken over until December 31 of the fifth year following that of the acquisition;
b) The acquisition confers on the purchaser the majority of the voting rights attached to the securities of the acquired company;
c) From the date of the acquisition, the acquirer exercises in the company taken over one of the functions listed in 1 ° of article 885 O bis and under the conditions provided for therein;
d) The company acquired has its registered office in France or in another Member State of the European Community and is subject to corporation tax under the conditions of ordinary law or to an equivalent tax;
e) The turnover before tax of the acquired company did not exceed 40 million euros or the balance sheet total did not exceed 27 million euros during the financial year preceding the acquisition.
II. – The interest giving entitlement to the tax reduction provided for in I are those paid on the basis of loans contracted from the publication of Law No. 2003-721 of August 1, 2003 for economic initiative. They are withheld within the annual limit of 10,000 Euros for single, widowed or divorced taxpayers and 20,000 Euros for married taxpayers subject to joint taxation.
III. – The securities the acquisition of which gave rise to the right to the tax reduction cannot appear in a share savings plan defined in Article 163 quinquies D or in a savings plan provided for in Chapter III of Title IV of Book IV of the Labor Code.
IV. – The provisions of 5 of I of article 197 are applicable to the tax reductions provided for in this article.
V. – The tax reductions obtained are the subject of a reversal:
1 ° When the commitment mentioned in a of I is broken, for the year during which this breach occurs;
2 ° If one of the conditions mentioned in b, c and d of I ceases to be fulfilled before 31 December of the fifth year following that of the acquisition: in this case, the recovery is carried out for the year during which the condition is no longer fulfilled.
Subject to the condition mentioned in d of I, these provisions do not apply in the event of disability corresponding to classification in the second or third of the categories provided for in Article L. 341-4 of the Social Security Code or of the death of the purchaser.
VI. – In the event of transfer of securities or non-compliance with one of the conditions mentioned in b, c or d of I beyond December 31 of the fifth year following that of the acquisition, the tax reduction n ‘is no longer applicable from January 1 of the year in question.
Article 199 terdecies A
I. 1. Employees of a company who subscribe in cash to the initial capital or to capital increases occurring within three years of the date of incorporation of a new company, the sole purpose of which is to buy back all or part of the capital of their company can benefit from a tax reduction equal to 25% of the payments relating to their subscriptions. These payments must be made within three years of the date of incorporation of the company and are retained within a limit which cannot exceed during this period 40,000 F for single, widowed or divorced taxpayers, and 80,000 F for married taxpayers subject. common tax. The provisions of 5 of I of article 197 are applicable.
An employee can only benefit from one of the advantages mentioned in the first paragraph or in article 83 ter and for subscriptions to the capital of a single company.
2. The advantage provided for in 1 is maintained in the event of contributions of the shares of the new company made under the conditions mentioned in 2 of I of article 83 ter.
3. Employees of companies whose capital is held for more than 50%. 100 by the acquired company can benefit from the advantage mentioned in 1 under the same conditions.
II. The provisions of II of article 83 ter are applicable.
III. The benefit of the tax reduction is subject to compliance with the conditions listed in III of article 83 ter.
IV. In the event of a transfer of shares or units under the conditions mentioned in IV of article 83 ter, the total tax reductions obtained previously in application of this article are subject to a reversal in the year of the transfer, in accordance with the terms set out in the same IV of article 83 ter.
V. Subscriptions to the capital of the new company which gave rise to the benefit of another deduction from income, a reduction or a tax credit cannot benefit from the advantage provided for in 1 of I.
VI . The provisions of VI and VII of article 83 ter apply to this article (1).
(1) As regards the conditions of application of article 199 terdecies A, see articles 46 AM to 46 AO of annex III.
