The draft of a third Amending Finance Act for 2012 presented recently to the French Assemblée Nationale (lower house) would impose new capital gains tax rules on companies that move fixed assets out of the country when transferring their headquarters to another EU member state.

The draft states that if a registered office or establishment is transferred from France to another EU member state, any unrealized capital gains on fixed assets that are transferred, as well as any deferred capital gains, would be subject either to immediate taxation or to a five-year tax payment plan.

The new provisions also would apply to transfers to member states of the European Economic Area that have concluded with France a convention on administrative assistance to combat tax evasion and avoidance and a convention on mutual assistance in tax matters.

Under the proposed exit tax provisions, the taxpayer would have to pay its corporate income tax in full within two months after the transfer of the assets or, upon request, could pay a fifth of that amount, with the balance paid in equal installments on or before the anniversary date of the first payment for the following four years or at any time before the expiration of the
payment period.

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