Article 16 of the second 2012 Amending Finance Act is aimed at reinforcing the anti-abuse provisions for divestment schemes referred to as “coquillards” (thieves) schemes, which was already adopted with the first 2011 Amending Finance Act, adding three new measures.

As a reminder, these schemes consist of first distributing the subsidiary’s dividends to the parent company tax free (tax consolidation) or merely minus a 5% portion of costs and charges (parent-subsidiary tax regime), then the parent company posts a loss, a capital loss or depreciation of its subsidiary’s shares corresponding to the amount of the dividend that was previously paid.

  • Real estate dealer company :  exclusion of shares booked in inventory from the parent-subsidiary tax regime

One of these new measures is aimed at companies which are in the scope of the real estate dealer company tax regime, provided in Article 35-I-1° of the French Tax Code (“FTC”) and which hold an inventory of shares in real estate companies if such shares were acquired in order to resell them.

Unlike the two other schemes mentioned in Article 16 of the Amending finance Act (shares in companies whose assets are not long-term shares and merger of a subsidiary acquired in within the past two years), this scheme does not involve making the capital loss or depreciation posted on shares held by real estate dealer non-deductible, rather, it involves excluding the dividends paid by these companies to real estate dealer from the parent-subsidiary tax regime.

Hence, according to the legislation’s current wording, any distribution of dividends paid by a company the shares of which are booked as inventories by real estate dealer, whether or not they are followed by the recording of a loss deduction, is no longer eligible for the parent-subsidiary tax regime.

These provisions will apply to fiscal years ended as of July 4, 2012.