French tax changes in 2011 affected a wide range of taxpayers.

Businesses

The taxation of dividends a parent company receives from a subsidiary is no longer capped at the amount of expenses the parent incurs. The thin capitalization rules now apply to the interest paid to unrelated companies when a company related to the borrowing company secures a loan, except when there is a mandatory change of control.

The deductible amount of tax losses that can be carried forward against financial year profits is now limited to €1 million plus 60 percent of taxable profits above €1 million. Tax losses can be carried back only to the previous financial year and only up to €1 million.

The long-term capital gains tax on participating interest has increased, because the corporate income tax now applies to 10 percent of the capital gain.

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