(Article 114 of the 2016 Finance Act)

Article 114 of the 2016 Finance Act provides for a 25 % rate taxation of long-term capital gains relating to the disposal of shares of companies holding an authorization for the provision of television services.

The purpose of the measure is to discourage television service editors from speculating on authorizations freely granted by the CSA (Audiovisual Council), by introducing a taxation on the disposal of the shares of companies holding these authorizations. This measure was notably implemented as a reaction to the sale project of the TV channel Numero 23 to NextRadioTV.

This measure concerns capital gains made on the disposal of: 

  • shares of companies whose assets are, at the time of the disposal, constituted for more than 50 % of their market value by an authorization of broadcasting a television service; and  
  • shares of companies controlling such company whose assets are, at the time of the disposal, constituted for more than 50 % of their market value by shares of such company.

It only applies for the first disposal of shares following the granting of the authorization, in case the disposal leads to a change of direct or indirect control (within the meaning of Section L. 233-3 of the French Commercial Code) of a company owning the authorization.

Where the first disposal occurs in the context of a merger or a partial transfer of assets, the capital gain made on the subsequent disposal of shares received in consideration of the operation is subject to tax at a rate of 19 % on the capital gain derived from these shares.

Provisions for impairment of the abovementioned shares are subject to the measure applicable to these same shares.

The new provisions may be combined with those provided for by Section 1019 of the French Tax Code which provides for the taxation of gross capital gains on disposal of shares of companies providing television services at a maximum rate of 26 %.

This new measure applies to authorized disposals which lead to a change of control as of September 30, 2015.