Legal news

A new project of the law relative to the fight against fraud was submitted 

As a counterpoint to the project of the law “Confiance”, having an ambition to protect the citizens acting in a good faith in their relations with the administrations, the government has submitted to the Senate (“Sénat”) March 28, 2018 a new project of the law aiming to strengthen the fight against fraud.

The project subject to the an accelerate parliamentary procedure has a goal to strengthen the efficiency of the fight against tax evasion, customs fraud and social security fraud.

The penal sanctions will be strengthened again

The project provides heavier sanctions for the tax evasion crimes (“délit de fraude fiscale”) than provided by the article 1741 of General Tax Code (“CGI”).

Thus, the potential fine currently limited by 500.000 EUROS (or 3.000.000 EUROS in the case of the aggravated tax evasion (“fraude fiscale aggravée”)), can consist the double of the profit from the tax evasion.

Besides, a complementary punishment by publication and dissemination of the decision of condemnation for the tax evasion, currently pronounced as an optional measure, will become mandatory except for specially motivated opposite decision (articles 5 and 8 of the project).

Regarding the procedure, the summons on the preliminary recognition of the guilt (plead guilty (“plaider-coupable”)), existing of today only in the special cases, indicated explicitly by the law, will be extended to the the abovementioned crimes ( Article 9 of the Project).

The tax sanctions can be published

As the penal sanctions, the tax sanctions can become a subject of publication.

The fines and the surcharge applied against the legal entity for the serious omission will be concerned, when there is violation of rights estimated for the sum 50.000 EUROS minimum and actions in order to commit a fraud.

The publication will be made on the internet site of the Tax Authority after notice by the special commission.

However, it cannot be applied before the final condemnation for the fine and of the and the surcharge and will be excluded when the complaint is lodged by the Authorities (Article 6 of the Project).

The professional circulating the fraudulent schemas can be sanctioned

A new type of the infringement will be created, relative to the third persons, providing intentionally in the frame of their professional activity, namely consultant, services allowing directly realization of the fraudulent schemes.

In the hypothesis when the tax payer in the result of realization of such a scheme, is condemned for the surcharging of 80% for the occult activity, violation of rights, fraudulent actions or absence of declaration of the foreign account, the provider of services will receive a fine equal to 10.000 EUROS or, if the sum is superior, of 50% of the profits made because of the services provided to the tax payer.

The tax complexity will be penalized (Article 7 of the article).

The obligations of the online platforms of transaction will be redefined

The operators will be liable, as it is today, to keep the users informed about the tax and social security obligations in the case of each transaction and to send them yearly a document summarizing the gross sum of the realized transactions.

However, the obligation of an annual certification by the independent third person will be abandoned and non-compliance with the obligations will be directly sanctioned.

Thus, in the absence of the information in the moment of transaction the special fine will be applied, which can reach an amount of 50.000 EUROS, whereas non-delivery of a summary will lead to the application of the fine of 5 % of the sums, declaration of which was not made, which is provided by the article 1736 of the General Tax Code (« CGI »).

In the same time, the operators should address the Tax Authorities till the January 31 of each year an document summarizing totality of the information containing in the summarizing documents sent to the users.

In the case of failure to provide such documents, the fine of 5 % is provided by the article 1736 of the General Tax Code (« CGI ») will be applicable.

This obligation corresponds to the obligation of the declaration which should be applied for the first time to the incomes received in 2019 but for which no sanctions were determined.

The unity of the provisions will concern the operators not regarding their place of establishment et will aim the users of the platforms, residing in France or who carries out their sale or services in France.

It will be applied to the incomes received beginning from the 1st January 2019 (Article 4 of the Project).

The list of the NCCT will be extended

The project provides to add to the list of the non-cooperative countries and territories (“Etats et territoires non coopératifs” (ETNC)) defined by the article 238-0 A of the General Tax Code (« CGI ») present in the list adopted by the European Union December 5, 2017 and recently updated.

While the article 238-0 A of the General Tax Code defines currently as the non-cooperative countries and territories (NCCT) the politic entities refusing the international standards of the sharing tax information, it will aim to include two categories of the entities:

• The Countries or the territories included to the European list because of facilitation of the creation of offshore structures or schemes designated to attract the revenues which does not reflect the real economic activity. The unity of the restrictive tax measures which are created for the NCCT will be applied to these entities ;

• The courtiers or the territories which are included into the European list for the other reasons (namely non-compliance with the criteria relative to the tax transparency).

Finally, taking into account a discretion of the Constitutional Council (“Conseil Constitutionel”) that requires the taxpayers to be authorized to prove that the operations connected with the NCCT do not have neither for purpose nor for effect to allow, in the purpose fraud or tax evasion, the localization of the incomes abroad, the project introduces the protective clauses (“clauses de sauvegarde”).

The following article of the General Tax Code (“CGI”) are aimed : 39 terdecies, 5 (distributions made by the venture capital companies (“sociétés de capital risque”), 125-0 A, II bis (levy on the products of the capitalization contracts transferred to non-residents (“prélèvement sur les produits de contrats de capitalization versés à des non-résidents”), 182 A ter, V (a withholding tax (“retenue à la source”) on the gains of the option exercise (“lévée d’option”) carried out by non-residents), 182 B, III (a withholding tax (“retenue à la source”) on the non-labour (“non-salariaux”) incomes transferred to the non-residents), 244 bis (tax (“prélèvement”) on the profit of real estate made by non-residents), 244 bis B (tax on the gain of the cession of the social right (“droit sociaux”) made by non-resident), as well as the article L 62 A of the LPF (exclusion of the procedure of regularization).

The provision related to the NCCT (article 11 of the project) will be applied beginning from the first day of the second month following the date of publication of law.

180419 A new project of the law relative to the fight against fraud was submit (Un nouveau projet de loi relatif à la lutte contre la fraude a été déposé)_0

Administrative comment on the matter of two exceptional contributions applicable to the financial year from 31 December 2017 to 30 December 2018.

In this comment on two new contributions based on the corporate tax (“IS”) of the entities performing respectively a turnover equal or superior to the sum from 1 to 3 milliards euros for the financial year starting from 31 December 2017 and closing 30 December 2018, the Administration gives notably its precisions :

• Concerning the liable persons :

• the liable persons are those performing a taxable result, wholly or in part, by a corporate tax, at a rate of 33,1/3 %, 28%, 25% 19%, 15% or 0% of the profit or added value ;

• the companies members of the group of the entities excluded of the Corporate tax (“IS”) or out of the field of the tax are the subject to the contribution on the proportional share of the result of its companies ;

• the companies that have chosen a tax regime of the partnerships are not subject to the contribution ;

• a non-liability of the legal entities the beneficiary of the exonerations or of the particular regime on the matter of corporate law (“IS”) is limited to the activities that are not subject to the corporate tax on the rate aimed by article 219 of the General Tax Code (“CGI”) (ex: Real Estate Investment Company (“SIIC”) that have chosen a regime of an article 208 C of the General Tax Code (“CGI”) ;

• Concerning turnover :

• It is confirmed that it is intended to the sum not including the tax on the whole of the products that relate to the normal exploitation and common to the activity of the entity ;

• the turnover does not include the financial products (unless the regulations of the sector provide it), the exceptional products and charges (except for the cases of the commissionaires opaques) ;

• the totality of the turnover should be taken into account, taxable and exonerated of the corporate taxe activity, therefore they concern a normal and common activity ;

• the turnover should be broken down depending on territoriality of the corporate tax ;

• in the group of the entities the turnover of the entity-new member of the group should be taken into account, but not of those that leave the group under performance subject to the contribution ;

• Concerning the liquidation, the Administrations admits that the sum of credit of the tax that could not be attributed to the corporate tax (“IS”) or on the sum of the social contribution  will be attributable to the sum of the contributions while the tax convention concerning elimination of a double taxation of the tax matters on the incomes concluded by France stipulates that the tax credits attached to the incomes having their sources in the state or on the territory cocontractant of the France are attributable to the corporate tax (“IS”) and the taxes of the same nature counted in France of the incomes ;

• Concerning the sanctions :

• The interest of late payment in the event of the default of payment is not applicable in case of not deliberate breach interior or equal to the one twentieth of the base of taxation ( provision of the article 1727, II, 4 of the CGI) ;

• The rating of 5 % for the delay of the payment ( CGI, art. 1731) is not applicable since the contribution is collected following the control.

 180329 Corporate tax (impôt sur les sociétés).pdf

The allocation of costs, the voting terms, the role of each person within the « co-ownership »…

All these notions seem obscure to you?

Let us guide you and thereby become a knowledgeable « co-owner ». You ‘ve just acquired your dream apartment. Therefore, you just become «co-owner» and, as such, a decision-making member of your building. From now on, if you want to take actions, a good knowledge of all the machinery is required.

Key players:

The « co-ownership trustee » is mandatory in every « co-ownership ».

It can either be a paid professional, or a non-professional volunteer. In every instance, it is a person responsible for the preservation of the building, as well as managing «co-ownership » staff, keeping the « co-ownership » financial accounts in order, and maintaining the archives. The co-ownership trustee’s mandate is generally of 3 months renewable. He guarantees the execution of the « co-ownership » decisions.

He is appointed by an absolute majority (see chart). The « association of co-owners » is the organ which owns the communal areas. It forms the decision-making legal entity of the « co-ownership ». The «co-ownership board » is formed by «co-owners» designated by the « association of co-owners».

It provides the link between the « association of co-owners » and the « co-ownership trustee ». It assists the latter and controls its management.

The «general assembly » gathers all the «co-owners», each one of them as the right to participate in it. It shall meet at least once per year to decide on all the matters related to the organization, functioning and management of the « co-ownership ».

Documents made available:

The « declaration of condominium » is the most important document. It especially sets the repartition between communal areas and private areas. It also determines the conditions of use that apply to these areas. Its modification can only be effective through a « double majority vote» (see chart).

The « descriptive schedule of division» is most often attached to the « declaration of condominium ». It includes the list of every «private property lot» – each lot is registered at the «Land Registry» under a number – its detailed description, as well as its intended use. This document also specifies the «percentage number» corresponding to each lot, which determines directly the voting rights to the «general assemblies» (see chart on the next page). It indicates what is your «proportionate share» of the property in communal areas and in the various charges: maintenance, elevator, green spaces, caretaker…

The building «maintenance book».

It is kept up to date by the « co-ownership trustee », it indicates the significant construction works done or voted as well as all the current contracts in which the «co-ownership » is committed to: maintenance, insurance…

 General assemblies’ Official reports» report every decision voted during the «co-owners’ meeting».

They enable anyone to know which works are going to start in the near future, as well as those considered or postponed for various reasons (budget, additional cost estimate, etc.)

Understanding the amount of charges

The law distinguishes between general «co-ownership charges», which are linked with the preservation, the maintenance and the management of communal areas and the charges generated by the collective facilities (elevator, community heating, etc.). To each lot corresponds its «proportionate share» of communal areas, expressed in thousandths or in «percentage number», determining an allocation of charges. The «percentage number», also determines the number of votes possessed by every «co-owner» at the «general assemblies».

If your «co-ownership » includes 200 thousandths and your «proportionate share» is 10 thousandths, you must use the following formula (proportionate share/ total amount of vote) X 100.

Thus, you will get your votes percentage.

In the present example, the calculation is (10/200) X100, what leads to the result of 5% of the «co-ownership » votes.

fichier à telecharger:
180313 Living in « co-ownership », user instructions

About the decision of the Council of State (« Conseil d’Etat ») CE, 8 déc. 2017, STE SOPARFI

After the decision of the Constitutional Council (« Conseil constutionnel ») of October 6, 2017 (Cons. const., 6 oct. 2017, n° 2017-660 QPC, SOPARFI: Dr. fisc. 2017, n° 41, comm. 501, note N. Jacquot et P. Mispelon. – M. Pelletier, La fin de la contribution de 3 % sur les montants distribués : Dr. fisc. 2017, n° 41, act. 539), the decision of the Council of State (« Conseil d’Etat ») on the appeal for excess of pending power before it and which had given rise to the transmission of the priority preliminary rulings on constitutionality (“QPC”) was less expected (V. dans le présent numéro CE, 8e et 3e ch., (…).

Nevertheless, one question still should be settled, even if in fact there was no any debate: the one that rises from the other versions of the first paragraph of the article I 235 ter ZCA, since the Constitutional Council (« Conseil constutionnel ») did not mentioned that the applicable version is the one issued by the Amending Financial Law (« la loi de finances rectificative ») 2015.

Thus, the other versions of the text were still, theoretically, in force.

The Council of State (« Conseil d’Etat ») has restrained the priority preliminary rulings on constitutionality (“QPC”) in its decision of transmission of July 7 the latest to the version of the 2015 of the text about contribution of 3 % (CE, 8e et 3e ch., 7 juill., 2017, n° 399757, Sté SOPARFI: Dr. fisc. 2017, n° 29, comm. 409, concl. R. Victor. – N. Jacquot et P. Mispelon, Autre QPC passée, la contribution de 3% bientôt trépassée ? : Dr. fisc. 2017, n° 28, act.402).

It has indirectly estimated that the subject of BOFiP appeal had aimed only this part of the text.

Nevertheless, the entity SOPARFI tried to by-pass the obstacle by the deposit of the 3rd priority preliminary rulings on constitutionality (“QPC”).

It estimated actually that the unity of the consecutive versions of the first paragraph of the article 235 ter ZCA which were in fact commented by BOFiP were attacked because in every paragraph it specified that the contribution should be applied to the distribution payed beginning from August 17, 2012.

Through deposit of this another priority preliminary rulings on constitutionality ( “QPC”) which was aiming exclusively the 2012 version of the text establishing the contribution (and that could be followed by the other priority preliminary rulings on constitutionality ( “QPC”) on the other version of the text), the entity wanted to give an occasion to the Council of State (« Conseil d’Etat ») to take quickly a position relative to the application of the decision the Constitutional Council (« Conseil constutionnel ») concerning the previous versions of the text, being, nevertheless in doubts if the  priority preliminary rulings on constitutionality ( “QPC”) will be rejected.

fichier à telecharger:
180306 Contribution of 3 % the priority preliminary rulings on constitutionality can be ceased (Contribution de 3% les QPC peuvent cesser)

1151 towns soon to be concerned ?

Implemented in Paris since August 1st 2015, the regulatory framework on rent control has been effective in Lille since February 1st 2017. Introduced by the Alur Law of March 24th 2014, this measure, which was supposed to be effective in the biggest conurbations of the territory, was eventually restricted, by Prime Minister Manuel Valls, to the only voluntary cities.

The “council of State” condemned for “abuse of power” this experimental implementation, which wasn’t expressly organized by the law. Thus, the association “Apart lease, a springboard for housing”, which originally initiated the proceeding, just won the case. The future of this framework will belong to the new President of the Republic (see quarterly notary advises n°463). Rent control, as intended in the Alur Law, was concerning 28 conurbations, that is to say 1151 towns.

fichier à telecharger: 
180313 Rent control

In the context of granting a credit to a real estate civil companies («sociétés civiles immobilières – SCI») or alternatively to a limited liability company («société à responsabilité limitée – SARL») holding a property, lenders usually require a pledge of the shares («nantissement des parts») of that company, in addition to the Usual real estate security (mortgage, lien) taken on the real estate. On the occurrence of a default of payment under the secured obligation, the question is how the pledging of shares of SCI or SARL can be exercised and within what time limit. Ultimately, it is a matter of measuring the effectiveness of this precaution, in particular when this pledge is combined with  a « pacte commissoire ».

Is the realization of pledging made easier by the « pacte commissoire» ) ?

The prohibition of the CI provision “legitimates the intervention of the Judge”.

According to the general principle of execution derived from article L. 311-3 of the Code of Civil Procedure (« Code de procedure civile»), the immediate execution clause (« clause de voie parée ») is prohibited. The rule of prohibition of the immediate execution clause (« clause de voie parée ») is to claim void any clause, previously negotiated or concomitantly to proceed the granting of the credit, which would allow the creditor to be awarded shares outside the control of the judge. Conversely, an immediate execution clause (« clause de voie parée ») negotiated after the granting of the credit is valid.

In other words, any clause intended to oust the forms of seizure to sell the debtor’s property is prohibited. At the same time, the legislation authorizes an allocation of shares by order of the court («attribution judiciaire des parts»).

An allocation by order of the court («attribution judiciaire») and sale to a third party – According to еру article 2346 of the Сivil Code (« Code civil »), the creditor may order the sale of the pledged property in the court: this is the mechanism of ” An allocation by order of the court («attribution judiciaire»)”, which is the mechanism for the realization of common law articulated according to the rules of civil procedures of execution.

In parallel with the mechanism of an allocation of shares by order of the court («attribution judiciaire des parts»), the legislator finally moderated the intervention of the judge by introducing the mechanism of the « pacte commissoire» in the common law of the pledge (articles 2347 and 2459 of the civil Code) during the reform of 2006.

The « pacte commissoire» ) allows the allocation of the shares for the benefit of the creditor solely because of default of payment by the debtor, not without maintaining a mechanism of protection of the debtor under the control of the judge.

« Pacte commissoire » and transfer of ownership to the creditor – Thus, in order to accelerate the realization of the pledge, it may be appropriate to insert in the constituting document the pledging of shares of SCI or the pledge of shares of SARL, a “pact commissoire” on the basis of article 2348 of the civil Code, namely a “sui generis” convention under which the creditor has the right to be awarded the thing (here the shares) pledged for lack of payment under the secured obligation.

In the formation of this « pact commissoire», the prior consent of the other SCI partners to this pledge project will be obtained. Similarly, it will be sought the consent of the SARL audit project which shall carry the approval of the cessionaire.

Some authors reconcile « with the concept of a contract of sale, the borrower committing to dispose of his property». The same authors also see by analogy a “giving in payment”. The sale to a third party may collide with the character intuitu personae which allows the partners to oppose the arrival of a third party to the capital: that is why the « pact commissoire » has a certain interest. In any event, the realization of the pledge and the Commissoire Pact face a number of difficulties arising from the residual applicability of the law of Civil enforcement proceedings. The judge’s residual intervention limits the effectiveness of the pledge : « Pacte commissoire » and the necessity of judgement.

The realization of the «Pacte Commissoire» is slowed by the protective measures of ensuring that the creditor receives no more than his due. This principle of “non-despoilment” of the debtor is recalled in articles 2347, 2348 and 2460 of the Civil Code (« code civile »). On the one hand, the conventional allocation of shares must give rise to an estimation given by an independent expert. The expert responsible for estimating the units may be appointed by mutual agreement by the parties, or by default by the judge.

On the other hand, if the value of the shares exceeds the amount of the secured debt, the creditor owes the debtor an amount equal to the difference between the value of the shares and the amount of the secured debt. In the event of difficulty of carrying out the pledge, the judge may be seized by the debtor, and the liability of the negligent lender, see criminal, is not remote. To guard against such a risk, it is difficult to see how the lender could avoid obtaining a court decision enforceable in order to carry out its pledge, at the risk of reverting to the common law of seizures. Moreover, it is worth recalling that the rights of third parties must be respected: the realization of the Commissoire pact cannot play at the expense of the creditors holding a real right on the good against the beneficiary of the Covenant because they can invoke their right to suite.

« Pacte commissoire» and collective proceeding – An article L. 622-7, I of the Commercial Code («code commercial »), to which an article L. 631-14 refers, provides that the opening of a collective procedure is an obstacle to the conclusion and realization of the « pacte commissoire ».

The implementation of the Pact is therefore prohibited in all phases of the procedure, starting from the safeguarding to the judicial liquidation. Of course, the pact reiterates its strength in the light of a pledge made by a third party to secure the debtor’s debt, and provided that the pledged property is not included in the assets of the proceedings. The risk of opening up a collective proceeding against the debtor does not seem to hinder the operation of the said Pact, if it is concluded and untied before the opening of the proceeding before the court.

To sum up – On the one hand, the realization of a pledge on the securities of a company holding a real estate does not allow to effectively or fully oust the litigation relating to the seizure of the real estate property as it results from the rules of the executional rules of the Code of civil procedure

(« сode de procédure civile»).

On the other hand, and more generally, one can legitimately doubt the creditor’s interest to carry out the said pledge with «pacte сommissoire» and become the owner of real estate. The risk would be for the lender to have to assume a litigation of the expertise, and in the end to bear the payment of the price of the real estate property, the taxation of the transfer of property, the expenses of the maintenance of the building, and the costs of the future sale which will be necessary for the recovery of the receivable, the distribution of the price to finally satisfy all the creditors.

In a nut shell, the sole purpose of the pledge of shares is to oblige the borrower to remain the owner of the holding structure of his estate assets throughout the credit term, and thus not to sell the shares of the company without the prior agreement of the creditor. Thus, pledging is only a “deterrent” tool, and is closer to an effective form of “negative security” to materialize the borrower’s commitment to retain its shares. In this only, the pledge effectively supplements the mortgage without replacing it. The mortgage remains the “Queen of Security Interests”: it will be carried out according to the rules of seizures and executions of common law, then substantially reducing the interest of the pledge.

fichier à telecharger:
180305The realization of the pledge of shares of SCI or SARL ( la réalisation du nantissement de parts de SCI ou de SARL)