Donations & Legacies

According to Article 893 of the French Civil Code, a liberality is the action by which a person gives, free of charge, all or part of his or her assets or his or her rights to the benefit of another person. Liberalities are possible only between living people or by will.

1. Gradual and residual liberalities

Gradual liberality (Article1048 et seq. of the French Civil Code):

A gradual liberality is a donation or a legacy through a first person, the first done / legatee, who:

– is in charge of keeping the asset; and
– to pass it on at his or her death to a second person, the second done / legatee.

This second donee is already named by the donor who made a donation / legacy to the first donee. In fact, only the second donee is considered as the actual donee. The first donee does not have any right to dispose of the assets given by the donor / testator.

Summary :

I. PRINCIPLES

II. DUTY REBATE

III. PASSING ON COMPANIES

fichier à telecharger:
SUCCESSION – DONATION – FEES AND SCALES_2014-07-14

Legal opinion about the Financial Law n°2011-1978 of December 28, 2011 for 2012

I – V.A.T (“T.V.A”):

The Reduced-rate (« taux réduit ») of 5,5% is raised to 7% except for the products and services of first necessity (alimentary products, equipments for disabled person…) which continue to benefit from the rate of 5,5%. This new Reduced-rate applies since the 1st of January 2012 for most products and services to which the previous rate of 5,5% was applied. There is a limitative list of products of services which continue to benefit from the rate of 5,5%.

Since the 1st of January 2012, there are 4 rates of VAT applicable in France:

– The normal rate = 19.6%: this rate applies to all the products and services which do not require the application of a particular rate;
– A Reduced-Rate (“taux réduit”) = 7%: for the products and services previously liable for the 5,5% rate;
– A Reduced-Rate (“taux reduit”) = 5,5%: for a list of products listed exhaustively by the law (article 278-0 bis of the French Tax Code (“Code Général des Impôts”)); and
– A specific rate = 2,1%: for press publication, some drugs,…

Summary :

I – V.A.T (“T.V.A”):

II – CORPORATE TAX (“L’IMPOT SUR LES SOCIETES” OR “IS”):

III –PROFESSIONAL CAPITAL GAIN (“PLUS-VALUES PROFESIONNELLES »)

IV – WEALTH TAX (« IMPOT DE SOLIDARITE SUR LA FORTUNE » OR « ISF »):

V – SALE OF BUILDING TO RENOVATE (“VENTE D’IMMEUBLE ACQUIS EN L’ETAT FUTUR DE RENOVATION”)

VI – TRUST

fichier à telecharger:
120117 – Legal opinion about the Financial Law n°2011-1978 of December 28, 2011 for 2012

fichier à telecharger:
The French Tax System

SELF ENTREPRENEUR

LAW OF AUGUST 4TH 2008.

In order to become a self entrepreneur you must register your activity to the “Centre de formalités des enterprises” or to the Chamber of Commerce (“Chambre de commerce”) if you have a commercial activity.

There are some conditions to this statute:

– Regarding the turn over (“chiffre d’affaires”): The turn over must not exceed 80.000 Euros when your activity is to sale goods, objects, supplies, food or if you give housing services;
The turn over must not exceed 32.000 Euros if you provide any other services than those listed above;
The turn over must not exceed 32.000 Euros if you provide services included in the non commercial profit category (“benefices non commerciaux”).

– You must benefit VAT exemption (“franchise de TVA”);
– You can pay your income tax as a lump-sum settlement (“règlement forfaitaire”) based on your turn over if your tax household (“foyer fiscal”) does not exceed 25.195 Euros.
– Regarding the social costs (“charges sociales”) and fiscal liabilities (“charges fiscales”):

fichier à telecharger:
101115 – THE SELF ENTREPRENEUR

The trust deed (« la fiducie ») is defined by the article 2011 to 2031 of the French Civil code (Law n° 2007-211 of February 19th 2007).

The trust deed is the mean for one or many principals (“constituants”) to transfer properties (“biens”), titles (“droits”) and safeties (“sûretés”) to a trustee (“fiduciaire”). Those properties are separated from the trustee’s patrimony, who is acting in a determined manner for some beneficiairies (“bénéficiaire”).

Article 2011 of the French civil code: La fiducie est l’opération par laquelle un ou plusieurs constituants transfèrent des biens, des droits ou des sûretés, ou un ensemble de biens, de droits ou de sûretés, présents ou futurs, à un ou plusieurs fiduciaires qui, les tenant séparés de leur patrimoine propre, agissent dans un but déterminé au profit d’un ou plusieurs bénéficiaires.

The trust deed can be either legal or contractual.

The trustee’s property right (“droit de propriété”) is limited to:

– The use of its right in a determined manner defined by the trust deed; and
– Its right is temporary.

The trust deed can include either buildings (“immeubles”) or movables (“biens meubles”).

Summmary :

I. DEFINITION OF THE TRUST DEED.

II. CONCLUSION OF THE TRUST DEED.

III. TAXATION CONSEQUENCES.

IV. REGISTRATION FEES.

V. VALUE ADDED TAXATION.

VI. LOCAL TAXATION.

VII. THE ENDING OF THE TRUST DEED.

fichier à telecharger:
100121 THE TRUST DEED

Definition : (article 35 of the French revenue Code).

A property dealer (“marchand de biens”) is a person who buys in its own name, in order to sale buildings, businesses/commercial establishments (“fonds de commerce”), shares of a real estate comp any, or who usually subscribes those shares, in order to sale.

A person who, usually, buy real property (“bien immeuble”) in order to build properties and sale them. They are submitted to the payment of the Income tax (“impôt sur le revenu ”) within the category of profit from industrial and commercial occupations (“bénéfices industriels et commerciaux).

In order to be considered as a property dealer, you will have to fulfill two criteria:

• The operation made must have an usual character; and

• The speculative intending (“intention speculative”) at the time of the acquisition.

The profit or losses (“pertes”) are calculated from the difference between the sale’s price of the buildings and the coast prices (“prix de revient”) increased by the expenses (“frais et charges”). The profits are submitted to the income tax unless they are made by a civil company (“société civile”) in which case they are submitted to the corporate tax (“impôt sur les sociétés”).

The calculation base of the VAT (value added tax) is made from the margin (“marge’) and not the entire amount of the sale price.

The gross margin (“marge brute”) is the difference between:

• The expressed price (“prix exprimé”) and added expenses; and

• Either, the sum paid by the assignor (“cédant”) for the property;

• Or either, the nominal value (“valeur nominale”) of the shares given in exchange of transfers in kind (“apports en nature”) made.

The VAT rate is 19,6%.

According to the article 257

• 7 of the French income Code, the operations contributing to the construction of buildings (the purchase of a building land (“terrain à bâtir”), the sale of new buildings, or of real estate company’s securities (“titre de sociétés immobilières”)) are submitted to the property VAT

fichier à telecharger:
100113 – Property Dealer & Property VAT