Tax on real and personal assets

Tax issues

♦ Tax on real and personal assets
Special cases on share exchanges
Public offer launches by BNP on Paribas'shareholders' equity
Public offer and merger launched on the shareholders' equity of Paribas and its subsidiaries

TAX TREATMENT OF SHARES (1)

Tax treatment of dividends
- Tax treatment of dividends
  The information given below is applicable to distributions paid in 2011 (dividends paid in respect of the 2010 fiscal year, for tax due in 2012).
  Income distributed must be reported on the return of income, to which the copy of the tax declaration provided by the financial intermediary should be attached. If the shares are French shares - or non-French shares provided that the distributing company is based in a European Union State or has concluded a treaty for avoidance of double taxation with France(2) - the taxpayer may opt for one among the two following methods of taxation:
  a French fixed-rate dividend tax ["prélèvement forfaitaire libératoire" (PFL)],
  income tax at progressive rates on this income.
  The rate of fixed-rate dividend tax is 19%, or 32.5% including social security levies, for dividends paid since October 1st, 2011 (instead of 31.3% for dividends paid between January 1st, 2011 and September 30th, 2011). These taxes are due on a base consisting in the amount of the distributed dividends, without taking into account neither custody charges nor any allowance. The paying bank (established in France) must be informed of the choice for the fixed rate dividend tax at the latest at the time of the payment of the dividend. This information must be renewed for each payment.
  If income tax at progressive rates is opted for, the calculation of charge works as follows:
  an annual allowance of 40% of distributions;
  a deduction for depository fees;
  an annual allowance of €1,525 for single persons, widows/widowers or divorced persons, as well as for married couples electing for separate taxation, or €3,050 for married couples or civil partners electing for joint taxation (therefore, shareholders may be paid annually free of taxation, up to 2 541 euros or 5 083 euros depending on their status);
  income tax at progressive rates;
  in addition to income tax, social security levies are added (CSG : 8.2%, CRDS : 0.5%, general social security levy of 3.4% (instead of 2.2% until October 1st) to which is added a 0.3% contribution, RSA: 1.1%, making a total of 13.5% (instead of 12,3%) calculated on the basis of the amount of gross dividends received, before deduction of depository fees and before the two annual allowances;
  a fraction of the CSG social security levy (5.8%) is then deductible from the total income liable to tax.
  Please note: Opting for flat-rate dividend tax on some dividends will prevent the taxpayer benefiting from annual allowances in respect of other dividends received in the same year. Moreover, the fixed-rate dividend tax regime excludes the right to a deduction for part (5.8%) of the CSG social security levy.
  Social security levies on dividends are withheld at source by the paying organisation, whichever option the taxpayer elects for (fixed-rate dividend tax or progressive rate income tax). When the taxpayer chooses the taxation at progressive rates of his dividends, he must indicate their amount on his declaration n°2042, in the areas specified by the information document provided by his financial intermediary. The amount of the deductible CSG is then calculated by the tax Administration, which mentions it on the return of income which the taxpayer receives, the following year.
  In the special case where dividends are paid between the time of execution of the stock exchange trade order and the completion of the trade, the buyer is considered to be the shareholder from the day of execution of the order for purposes of application of the 40% allowance or for flat-rate dividend tax (even though for legal purposes ownership of the shares does not pass until completion of the transaction).
  Tax treatment is the same, whether the shareholder opts for payment in cash or payment in shares, where the latter is a possibility.
  
  (1) As stated by the legislation at the date of publication.
  (2) Starting from January 1^st, 2009 and for companies established out of the European Union, the treaty must contain a clause of administrative assistance in order to fight against fraud or tax avoidance. Companies have to be liable to the “IS” (Corporate Income Tax) or an equivalent tax for the foreign companies.
Tax treatment of capital gains on disposals (excluding French approved share savings plans - Plan d'Epargne en Actions - "PEA" )
- Tax treatment of capital gains on disposals (excluding French approved share savings plans - Plan d'Epargne en Actions - "PEA" )
  Except when otherwise stated, the information below is applicable to the capital gains realized from January 1st, 2011 on (for the tax return filed in 2012 and taxes due in 2012).
  The net capital gain (difference between the selling price - net of fees and taxes - and the purchase price - uplifted for costs of acquisition) realised on sale of shares must be shown on a specific return (no. 2074) attached to the return of income.
  The capital gain is taxed at an overall rate of 32.5% which includes, as well as proper income tax (flat rate: 19%), social security levies amounting to 13.5% in total.
  Moreover, the tax liability for capital gains made on amalgamations, mergers, spin-offs or similar may be deferred; under this measure, the return of capital gains is made only once, at the time of the ultimate sale of the securities acquired. The amount of the capital gain to be returned will therefore be equal to the difference between the selling price of the shares acquired on exchange, and the original cost price of the shares contributed to the share exchange.
  Please note: the allowance for length of ownership, ie a system of progressive exemptions for certain capital gains on sale of securities, which would have entered into force since 2012 onwards (for 1/3), and would have resulted in complete exemption from capital gains made on securities held for over eight years, is cancelled.
  In the case of a capital loss, the shareholder may offset it against capital gains made in the same year or in the following years, with a maximum carry forward of ten years.
Transmission of family assets
- Transmission of family assets
  Gifts enable you to pass down moveables - including shares - as well as immoveable property.
  Every six years, these gifts benefit from an exemption of €159,325 euros (per parent and per child) where they are made to children or to parents, and also to handicapped persons. For handicapped persons, the two exemptions can be combined, making €318,650. Gifts between spouses and civil partners qualify for an exemption of €80,724. An exemption of €15,932 applies to gifts between brothers and sisters.
  For gifts between nephews and nieces, an exemption of €7,967 applies. For gifts to great-grandchildren, it is €5,310. Gifts of sums of money, made by persons aged under 80 to their children, grandchildren, and great-grandchildren, are exempt to a limit of €31,865.
  Moreover, in the case of gifts arising from stock-options, the capital gain at vesting will now be taxable in the hands of the donor. This measure is however applicable only to options granted on or after 20 June 2007.
Special case of BNP Paribas shares held within a PEA approved share savings plan
- Special case of BNP Paribas shares held within a PEA approved share savings plan
  The PEA approved share savings plan is a special share account, allowing individuals resident in France for tax purposes to invest, on tax-advantageous terms, among others in shares of companies based in France.
  If the "normal" expected duration of a PEA approved share savings plan is 8 years, tax advantages start to accrue from the end of the fifth year of the plan.
  The maximum investment in cash is €132.000 per plan (married couples can open two plans), giving a maximum investment limit of €264,000 for a married couple electing for joint tax treatment. Dividends from securities held in PEA approved share savings plans can only be paid into the plan; they are added to capital free of tax (for listed securities).
  If the account holder makes no withdrawal before the end of the fifth year, shares held in the PEA approved share savings account will be completely exempt from tax (but not from social security levies calculated by bands) on the gains realised and the investment income received. Furthermore, if a PEA approved share savings plan which is closed after more than 5 years returns a capital loss, it is possible to offset this loss against gains made on any share account during the same year or in the ten years following.
  Shares of companies based in a European Union member state, received in exchange for quoted shares held by the plan, as part of an amalgamation, merger, spin-off or similar operation, may also be held by PEA plans.
  Important note: making gifts of securities held in the PEA approved share savings plan before the end of the fifth year will result in the closure of the plan and a tax charge on the net gain realised, since the gift is considered as an early withdrawal of the securities concerned. If the gift is made between the end of the fifth year and the eighth year, it will result in closure of the plan, but the net gain realised since opening the plan will not be liable to tax (but is liable to social security levies). If the gift represents only a partial withdrawal from the PEA approved share savings plan and happens after the end of the eighth year, the plan will not have to be closed and the net capital gain realised since the plan was open will be liable only to social levies.
Non-residents
- Non-residents
  Dividends distributed in 2011 by French companies to individuals who are non-residents are subject to withholding tax at a maximum rate of 25% (this rate is reduced, subject to certain conditions, to 19% for European Union residents, Iceland and Norway). However, these withholdings may be reduced or even removed all together by the effect of international tax treaties.
  This is particularly the case where the legislation provides that only the State in which the beneficiary is resident may tax dividends received by the beneficiary*.
  As far as capital gains on moveables are concerned, persons who are not resident in France for tax purposes are expressly exempted from any tax charge in France (subject to certain conditions being met).
  
  * However, whatever the place of residence of the beneficiary, a withholding tax of 50% in 2011 is applied when the dividends paid from March 1^st, 2010 on, are received out of France, in a State or a territory non cooperative.