Actualité fiscale janvier 2017

I. CORPORATE TAX

I.1. French tax

 Provisions not deducted for tax purposes and intangibility of the opening balance sheet – Administrative Supreme Court (“CE”), December 5th 2016, Orange, n°398859

The deliberate overestimation of net assets of the company does not prohibit the application of the principle of intangibility of the opening balance sheet of the first financial year not subject to the statute of limitations. Indeed, exceptions to this principle are exclusively laid down by the law.

 Bonds Redeemable in Shares (“BRS”): Simultaneous issuance and distribution of reserves – CE, January 13th 2017, SAS Ingram Micro, n° 391196

The simultaneous issuance of a BRS and of an exceptional reserves’ distribution constitutes an abuse of law in the circumstances of the present case. This decision is justified by the fact that these two transactions (i) had, in the long term, the same effects as a capital increase by incorporation of reserves while allowing the deduction of interest (which were non-taxable at the level of the sole shareholder of the issuing company) and (ii) did not generate any cash flow or change of the issuer’s financial condition.

 Capital increase of a Belgian company: Indebtedness and abuse of law – Tax Abuse of Law Committee, case n°2016-50

A French group subscribing loans from Luxembourg and Switzerland companies to capitalize a Belgian subsidiary (benefiting from the notional interest regime) which grants loans to a Spanish subsidiary of the group with advantageous financial terms is not an abuse of law since (i) the operations are not fictive, (ii) the Belgian company has a real substance and (iii) the overall scheme aims to maximize the return on invested equity.

I.2. International tax

 Exchange of information on money laundering in the European Union (“EU”) – Directive 2016/2258, December 6th, 2016

This new directive has been adopted to ensure that the exchange of information between Member States of the EU covers the effective beneficial owner of the financial accounts.

 EU list of Non-Cooperative Countries and Territories (“NCCT”) – Conclusions of the European Council 2016/C 461/02

This list should be finalized at the latest at the end of 2017 and should be based on three criteria: tax transparency (e.g.  application of the automatic exchange of information), tax fairness (e.g. existence of harmful tax measures and existence of offshore  structures/measures) and implementation of BEPS measures.

 US “foreigned-owned disregarded entities”: Reporting requirements – Regulation from the Internal Revenue Service (“IRS”) TD 9796

Foreign shareholders of US “disregarded entities” (e.g.  “single LLCs”) which carry out no commercial activity in the US will now be subject to reporting requirements before the IRS. This regulation applies on fiscal year opening as from January, 1st 2017, and clsoing after December, 12th 2017.

II. INDIVIDUAL TAXATION

 Managing holding companies: a definition still unclear – Ministerial answer to Mr Frassa question dated July 16th, 2015 (n° 17351)

According to the Economy and Finance Minister, the effective management of a group is characterised by a sufficient control of the holding company on its subsidiaries in order to concretely implement the group’s policy. The effective management of the group has to be supported by circumstantial evidences, notably the level of participation held (equity and vote) and the shareholding structure. Please note that the exclusive control of the subsidiaries has not been mentioned by the Minister.

 Priority Preliminary Ruling on Constitutionality (“PPRC”) with respect to:

 penalties applicable in case of failure to declare assets held by a trust – CE, December 23th, 2016, Mrs B, n°405025 :  A PPRC has been addressed to the Constitutional Council (“CC “) regarding the compliance of the penalty applicable in case of non disclosure of assets held in a trust with the principles of proportionality of penalties and of equality before the law.

 article L136-6 of the Social Security Code (“SSC”) – CE, December 15th, 2016, Mr. et Mrs V, n°401716 (following the De Ruyter case):  a PPRC has been addressed to the CC regarding the compliance of section L136-6 c) and e) of the SSC (in its version applicable in 2007) with the principles of equality before the law and of equality before taxation. These provisions would create a breach with person affiliated to the social security scheme of a non EU country.

 article 123 bis of the French Tax Code (“FTC”) – CE, December 15th, 2016, Mr. L., n°404270:  A PPRC has been communicated to the CC regarding the compliance of article

123 of the FTC with the principles of equality before the law and of equality before taxation.

 Valuation of non-listed shares: reduction for “key-manager” – Administrative Court of Bordeaux, November 22nd, 2016, n°14BX03020

In case of sale of shares in a non-listed company, a reduction may be applied – in addition to the reductions for illiquidity and minority shareholding – to take into consideration the influence of a “keymanager” on the company’s valuation.

 Parisian vacant apartments: increase of the surtax – Decision of the Paris city Council, January 31th, 2017

The Paris city Council has enacted on January 31th , 2017 a decision increasing the surtax applied

to Parisian vacant appartments from 20% to 60%.