SIGNIFICANT DEVELOPMENTS
As of January 1,1999, capital gains are generally taxable as ordinary income, regardless of the holding period of the assets.
TAXES ON CORPORATE INCOME
The only tax levied on corporate income is the corporate income tax. For fiscal years beginning as of January 1,1999 the applicable rate is 33.33%, plus two surtaxes (one permanent and one temporary) equal to 10% of the normal corporate tax (including the ordinary tax of 33.33% and a reduced tax of 19%-see "Capital gains" below) before reduction by the avoir fiscal credit and any foreign tax credit. However, businesses with annual sales of less than FF50 million whose share capital is owned at least 75% by individuals or by legal entities meeting these two conditions are exempt from the second 10% surtax, which applies to fiscal years ending until December 31,1999.
No tax is levied on income at the regional or local level.
A withholding tax is levied on French branches of foreign non-EU corporations at the rate of 25% or a reduced tax treaty rate (e. g., for the United States, 5%) on net profits. Refund (limited or full) of tax may be claimed to the extent that(1) the taxable amount exceeds the dividends(s) actually distributed by the foreign corporation during the 12 months following the close of the fiscal year concerned or (2) the dividends are distributed to residents of France.
CORPORATE RESIDENCE
A corporation is resident in France if either it has been incorporated in France or it has its registered seat in France. For this purpose, France is defined as metropolitan France (excluding Monaco but including the continental shelf), Corsica and the overseas departments (French Guyana, Guadeloupe, Martinique, Reunion, St. Barthelemy, and St. Martin).
OTHER TAXES
Turnover taxes/Value-added tax (VAT) is imposed on goods sold and services rendered in France. The normal rate is 20.6%. Other rates of 5.5% and 2.1% apply to specific sales and services. Exports and certain specific services invoiced to non-French residents are zero rated.
Business tax/The rate of this local tax varies; it is assessed on the rental value of fixed business assets and on salaries and wages. The latter basis will be gradually phased out until it is repealed in 2003.
BRANCH INCOME
Tax rates on branch profits are the same as on corporate profits. However, in principle, branch profits are deemed to be distributed to the head office. The total corporate tax burden on a subsidiary's profits distributed to the U.S. parent (42.99%) is now the same as on income of a U. S. company's French branch.
Profits realized in France by foreign corporations whose head offices are located in a European country are not subject to withholding taxes, provided that certain conditions are met( effectiv head office in a European country; foreign corporation subject to corporate taxation).
INCOME DETERMINATION
Inventory valuation/Inventories must be valued at the lower of cost or market. Cost must be determined in accordance with the FIFO or the average-cost method. The LIFO method i prohibited. Temporary inventory relief is available where inventory cost per unit increases more than 10% over two consecutive years. Any ecess increase over 10 percentage points may be reserved. The amount reserved is added back to taxable income after six years.
Capital gains/As of January 1,1999, capital gains are generally taxable as ordinary income, regardless of whether assets have been held for more or less than two years.However, capital gains resulting from the sale of participation shares in subsidiaries held for at least two years, as well as royalties derived from the licensing of patents and patentable know-how, still qualify as long-term and may continue to benefit from the reduced rate of 19% (increased by the two 10% surtaxes).
Long-term capital gains less the 19% tax thereon must be appropriated to a special reserve; the balance of corporate income tax (14.33%, ignoring the 10% surtaxes) becomes payable if this reserve is distributed to shareholders but not if it is offset against operating losses or later long-term capital losses, contributed to share capital or distributed upon liquidation.
Intercompany dividends/French parent companies (i.e., companies
incorporated in France and holding qualfying shares that represent at least 10% of the issued capital of subsidiaries, French or foreign) have the option of excluding 97.5% of the subsidiaries' net dividends from corporate income tax (from 1999 a 2.5% charges and expenses portion must be added back to the parent company's taxable results).
Foreign income/Resident corporations are taxed on their French-source income only, which excludes profits from activities carried out abroad through foreign branches. Foreign income is not taxable until actually due to French resident corporations. As a result, undistributed i
[1] [2] [3] 下一页
