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France: Domestic Corporate Taxation

Capital Gains Tax on the Sale of Shares

In France capital gains made by a French holding company on the profitable sale of its shares in a foreign subsidiary are subject to a reduced capital gains tax rate. In 2006, gains on the sale of shares in subsidiaries held for at least two years were taxed at a reduced rate of 8%. From January 1, 2007, 95% of these capital gains are excluded from corporate income tax, the remaining 5% portion being taxed at the standard 33.33% rate. Capital gains realized by non-resident investors on the sale of shares in French companies that are subject to corporate income tax are taxed (from 2006) at the rate of 16%, provided the non-resident investor has held at least 25% of the share capital of the French company at any time over the past five years.



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