Despite the elections receiving much of the attention, it has been a busy year for French tax developments.

Companies

An additional 5 percent surcharge contribution applies in 2012 when turnover exceeds €250 million. The deduction of financial expenses upon an acquisition of equity security is forbidden during the eight years following the acquisition, except:

• if the decisions relating to the shares are taken by the acquiring company or another French company belonging to the same economic group, and the control or influence over the acquired company is actually exercised by the acquiring company or its affiliate; or
• if the shares’ total value is below €1 million, the acquisition is not financed by a loan, or the group debt ratio to which the company belongs is greater than its own debt ratio.

Additional conditions have been placed on companies’ abilities to transfer the tax losses following a merger or to carry them forward in case of a change or reorganization of the company’s activity.

A new 3 percent tax applies on all dividend distributions, except for small and medium-size enterprises or when the participation exemption regime applies. Financial
debt waivers are not deductible.

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