Possible tax refund in France on shares capital gain (sale of a substantial participation)
Your company is established in one of the following countries: Austria, Spain, Hungary, Italy, Malta, Sweden…
Your company has sold a substantial interest in a French company in 2018 or later
Your company could benefit from a refund
Capital gains from the sale of corporate rights of French companies by foreign companies are subject to the levy provided for in Article 244 bis B of the French General Tax Code when the selling company has held, at any time during the 5 years preceding the sale, at least 25% of the share capital of the French company.
These provisions apply subject to international treaties, i.e., only in the event that the tax treaties provide for taxation in France of capital gains from the sale of substantial shareholdings in French companies.
However, companies established in another Member State or in a State party to the EEA that has concluded a tax treaty with France that includes an administrative assistance clause may request that this taxation be aligned with that which would have been payable by a French company.
French companies benefit from taxation limited to a share of costs and charges of 12% of the gross capital gain on the sale of their equity interests. The effective tax rate is therefore slightly less than 4%.
An European company meeting the same conditions can obtain the restitution of the levy of article 244 bis B, the rate of which is fixed at the normal corporate tax rate (28% in 2020), for the part exceeding the taxation of around 4% that would have been borne by a French company.
However, the Conseil d’Etat has just ruled in favor of a full refund of the levy. Indeed, the limitation of the refund to the only fraction of the tax exceeding that applicable to a resident company does not guarantee the compliance of these provisions with EU law.
European companies that have sold substantial shareholdings in French companies may request, on the basis of this decision, the full refund of the levy.
Such restitution may be obtained by filing a claim with the tax authorities.
Please note that for any levy paid in 2018, the claim must be filed before December 31, 2020.
For levies paid in 2019, the claim must be filed before 31 December 2021 and for those paid in 2020, before 31 December 2022.
ALTEXIS is a law firm dedicated exclusively to tax law. Our tax lawyers can assist you in this process in order to optimize your chances of obtaining this refund.
Reference : CE – 14/10/2020 n° 421524 AVM International Holding
Your contact: Marylène Bonny-Grandil
Article dated November 19th 2020 – Authors: Marylène Bonny-Grandil, Tax Lawyer, Axelle Keles, Lawyer