Taxation on capital gains: authorised reduction

April 4th 2015

After several months of public consultation, the tax administration integrated in the BOFIP (BOI-RPPM-PVBMI 10 to 60) its commentary on the taxation scheme of capital gains on share transfers entered into force on January 1, 2014 and which authorises a reduction on said capital gains depending on the length of time the transferred shares have been held.

The scheme in question provides, in particular, that for the directors who retire, these capital gains are reduced by a fixed allowance of 500,000 €; for any excess and insofar as certain conditions are met, a reinforced rebate compared to the taxation under the ordinary system by :

- 50% of their amount when the shares have been held for at least one year and less than four years on the date of the transfer.
- 65% of their amount when the shares have been held for at least four years and less than eight years on the date of the transfer.
- 85% of their amount when the shares have been held for at least eight years on the date of the transfer.

In its doctrine previously applicable in the same situation, the administration admitted that the equivalent provisions favourable to the retired directors also applied to capital gains on share transfers by other members of the family group which concomitantly transfer their shares.

This toleration no longer appears in the recent commentaries, therefore the transferor’s family members shall no longer benefit from the benefits related to the retirement of the latter and shall be taxed based on the ordinary taxation system.

Julien Charnay Rousset