- BNP Paribas at a glance
- BNP Paribas in Italy
- BNP Paribas in Italia (in Italiano)
- Financial information
- Results
- Specific presentations
- Newsroom
- Financial reports
- General Shareholders Meeting
- To be a shareholder
- Become a shareholder
- BNP Paribas share
- BNP Paribas Debt
- Glossary
- Questions / Answers
- Contacts
- Calendar
Home > To be a shareholder > Tax on real and personal assets
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 distributions
The information given below is applicable to distributions paid on or after 1st January 2009 (dividends paid in respect of the 2008 fiscal year, for tax due in 2010).
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 Community State or a State that has concluded a treaty for avoidance of double taxation with France - 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.
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;
- 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 2.3 %, Revenue for Active Solidarity: 1.1%, making a total of 12.1 %) calculated on the basis of dividends received, after deduction of depository fees, but 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;
- a tax credit reducing this liability: 50% of the dividend paid, with a ceiling of €115 for single persons, widows/widowers or divorced persons, and of €230 for married couples or civil partners electing for joint taxation; this is offset from the amount of tax payable for the year in which the dividends are received.
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).
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.
Tax treatment of capital gains on disposals (excluding french approved share savings plans - Plan d'Epargne en Actions - "PEA" )
ALLOWANCE FOR LENGTH OF OWNERSHIP
As of 1st January 2006, a system of progressive exemptions for certain capital gains on sale of securities by individuals was put in place, working on the basis of the length of time the securities had been held.
This exemption is achieved by means of a reduction by one third of the capital gain per year of ownership of the securities beyond the 6th year, which results in complete exemption from capital gains made on securities held for over eight years.
Regardless of the date that the share account was opened, the exemption applies only to capital gains arising on individual securities within it - taken in isolation - held for over 8 years; this is a notable difference from approved share savings plans [PEA], where the tax treatment depends entirely on the date that the plan was opened.
This exemption does not cover social security levies, which remain due on the whole capital gain realised by the shareholder.
Capital gains covered
The gains covered are gains on disposal for valuable consideration, made directly or indirectly, on units or shares held in full beneficial ownership or on separated rights (life interest, remainder). The securities involved may be held either in registered or bearer form.
Note: however, this exemption does not apply to gains arising from exercise of stock-options, nor to gains on disposal of units or shares in OPCVM mutual funds.
Main conditions for application
1. Calculation of length of ownership
Principle: the length of ownership of the securities sold is counted from 1st January of the year in which they were purchased or subscribed for.
Exception: the length of ownership is counted only from 1st January 2006 for securities acquired or subscribed for before that date (this means that the first one-third allowance will apply only to sales made on or after 1st January 2012 and that total exemption will only be achieved for sales made on or after 1st January 2014).
However, on retirement, SME directors may under certain conditions benefit from exemptions on their securities acquired or subscribed for before 1st January 2006.
2. The special case of sales of securities acquired through a series of transactions at different dates
- it is now compulsory to apply the "First In First Out” (FIFO) method to determine the length of ownership of the securities: the securities deemed to have been sold are those that were acquired or subscribed for earliest.
- Conversely, as was previously the case, the acquisition cost is determined by applying the "average weighted purchase price" method.
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.
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.
Trasnmission of family assets
Gifts enable you to pass down moveables - including shares - as well as immoveable property.
When made to children or parents, such gifts benefit, in any six-year period, from a tax allowance of €156,357 (per parent and per child). Gifts between spouses or partners in a civil partnership (PACS) attract an allowance of €79,221, while the figure for gifts between siblings is €15,636.
For gifts to nephews and nieces the allowance is €7,818. Gifts made by grandparents of any age to their grandchildren attract an allowance of €31,271, while a €5,212 break is applicable to gifts to great grandchildren.
Gifts of money made by donors under 65 to their children, grandchildren and great grandchildren (or in the absence of children, grandchildren and great grandchildren, to nephews and nieces, and, if the nephews and nieces have deceased, great-nephews and great-nieces) over 18 years of age, are tax-free up to €31,271 providing they are registered within a month by the beneficiary at the local tax office.
Physically or mentally disabled persons are entitled to an allowance of €156,357. This allowance can be combined with the relief on gifts of money made by donors aged under 65 as well as that on inter-spouse or intra-civil partnership gifts and those to grandchildren and great grandchildren. This means that a donation by a father to a disabled son would attract a total allowance of €312,714.
Note also that for gifts of shares arising from stock options, it is now the donor who will be taxed on the corresponding capital gain. This applies only to stock options granted after 20 June 2007.
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, in;
- shares of companies based in France or in other European Economic Area states, excluding Lichtenstein,
- in venture capital or innovation mutual funds (FCPR or FCPI),
- and in SICAV mutual fund shares and units of mutual funds eligible for inclusion in the PEA approved share savings plan. SICAV mutual funds and mutual funds eligible for inclusion in the PEA approved share savings plan can include European securities (as well as Norwegian and Icelandic ones from 1st January 2005) as part of the investments they are allowed to hold.
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.
From 1st January 2003, investment in cash was raised to €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 CRDS and CSG 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 Community 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.
The Special case of life assurance-based savings plans (Contrats d'assurance-vie et de Capitalisation) known as "DSK", then "NSK"
The information below, concerns bonds or contracts subscribed for on or after 26 September 1997. It has not been possible to take out new policies since 1st January 2005, but existing ones can still be funded.
These involve bonds or contracts, with a duration of at least 8 years, invested mainly in equities, the funds of which are made up of at least 50% EU or similar equities, with at least 5% risk capital (venture capital funds, shares, risk capital funds).
This quota of 5% was widened as of 1st January 2000 to companies listed on regulated markets for growth stocks in the European Economic Area, or in the growth stock compartments of these markets.
Provided these quotas are adhered to, along with the minimum holding period of 8 years, income arising from these contracts is exempt from personal income tax, but is liable to social security levies (12.1%).
If the quotas are not adhered to, and they are surrendered after the 8th year, the income is charged to income tax at progressive rates, or optionally at a fixed rate of 7.5%, after deduction of an allowance of €4,600 for single persons and of €9,200 for a married couple. This income is also liable to social security levies (12.1%).
If they are surrendered within 8 years, the income is charged to income tax at progressive rates or optionally at a fixed rate (35% for under 4 years; 15% for between 4 and 8 years).
NSK type contracts replaced DSK contracts as of 1st January 2005; they have the same tax advantages. The assets backing this new type of policy must include a minimum of 30% equities, including 10% in risk capital, of which 5% must be in unquoted companies.
Non-residents
Profits distributed by French companies to non-residents are subject to withholding tax at a maximum rate of 25% (this rate is reduced, subject to certain conditions, to 18% for European Union residents). 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).
Share
Calendar
Page last update 13/05/2008 - © BNP Paribas Legal information | Accessibility