The 2014 Finance Act made several changes to the tax regime applicable to the distribution of the assets of FCPRs (high-risk investment funds) and FCPIs (professional capital investment funds) along with the tax regime applicable to the capital gains distributed by OPCVMs (mutual funds).

In this respect, for certain distributions made to non-resident persons, Article 244 bis B of the French Tax Code provides that the following are henceforth subject to a 45% withholding tax when the “rights to the company’s profits” held by the seller or the shareholder, together with his spouse, ascendants or descendants, have collectively exceeded 25% of these profits at any time over the past five years:

  • distributions of assets performed by FCPRs, specialized professional funds or FPCI created in France and related to assets located in France; and
  • distributions performed by OPCVMs or collective investment funds created in France, deducted from net capital gains from sales of assets located in France.

This 45% withholding tax is increased to 75%, regardless of the percentage of rights held, if a payment is made to individuals or legal entities established in a Non-Cooperative State or Territory (NCST).

Non-resident individuals may obtain a refund of the excess taxes if the tax amount calculated pursuant to the graduated income tax schedule is lower than the 45% withholding tax.