What are the tax consequences in France arising from the transfer of the registered office of a company incorporated in an EU Member State to France?

 In a ministerial response “Buffet” of August 26, 2010, the French tax authorities have accepted that the transfer of the registered office of a company incorporated in another Member State of the European Union to France, along with the compliance of the company’s articles of association with French legislation, does not result in the tax consequences ordinarily associated with termination of a business (notably the immediate taxation of the untaxed profits).

Subject to the tax consequences, if any, in the country the company was formerly resident in (in this case, Luxembourg), the French tax authorities have advised that the tax neutrality of such a transfer concerns the transferring company and its French shareholders.

This approach mirrors the approach taken, in the opposite situation, as set out in article 221-2 of the French tax code (‘The transfer of a registered office in another EU Member State, whether with or without a loss of the legal personality in France, does not have the consequences of a termination of business’).

Any contrary approach would have constituted a restriction to the freedom of establishment prohibited by article 43 EC.