Enacted by the 2011 Amending Finance Act, Article 210 F of the FTC provides that the reduced corporate income tax rate, of 19%, applies to capital gains from sales of offices or commercial property carried out by a legal entity subject to the corporate income tax, when the purchasing entity has taken the commitment to transform the premises into housing units within three years after the end of the fiscal year during which the acquisition takes place. The sale must be made to a company subject to the corporate income tax under the rules of ordinary law, a specialized real estate company or an organization, a company or an association in charge of public housing. These provisions apply to sales made for consideration between January 1, 2012 and December 31, 2014.

The 2013 Amending Finance Act has modified Article 210 F, which henceforth provides that the reduced corporate income tax rate now applies not only to sales made until December 31, 2014, but also to sales for which a promise to sell has been signed before January 1, 2015 (promise to sell as defined in Article 1589 of the French Civil Code).

Moreover, the 2013 Amending Finance Act excludes, from the scope of Article 210 F of the FTC, sales made between a seller and a purchaser, who have “dependency links within the meaning of Article 39-12 of the same code”, i.e.:

  • when one company holds directly or through an intermediary the majority of the other company’s registered capital or exercises decision-making power in the second company;
  • when they are both placed under the control of the same third-party company, under the conditions defined above.

This limitation does not apply to sales occurring after January 1, 2014, and for which a promise to sell has been signed prior to such date.