Tax news november 2016

I. CORPORATE TAX

I.1. French tax

· Application for repayment of withholding tax: statute of limitation – Administrative court of Paris, October 18th, 2016, n° 1508498, Sté Bank Saderat Iran

Requests for withholding tax’s repayment referred to article 115 quinquies of the French Tax Code («  FTC ») are admissible beyond the specific claim period provided by article 380 of Annex II of the FTC. However, the request must be filed before the term of the general claim period of the article R*196-1 of the French Tax Procedures Code (i.e. before December 31th of the second year following the disputed tax payment when the taxation does not give rise to a tax notice or to the notification of an assessment notice).

· Publication of the Country-by-Country Reporting (« CbCR »): referral to the Constitutional Council (« CC »)

On November 15, the CC has been requested to examine the constitutionality of the provision of the Sapin II law providing for the publication of CbCR declarations. This measure would be in conflict with the entrepreneurial freedom and with the equality of taxpayers before public charges.

· CbCR: France should approve the agreement between tax authorities

The multilateral agreement CbCR about the exchange of CbCR declarations between tax authorities is included in the Draft law submitted to the French National Assembly, on November 2nd 2016.

· Contribution of 3%: adjustments – Draft amending finance law for 2016 (article 31)

As from January 1st 2017, would be exempted from 3% contribution (article 235 ter ZCA of the FTC), (i) the dividend distributions paid between two French companies which are not consolidated for tax purposes but meet the requirements (set by article 223 A of the FTC), and (ii) dividend distributions paid by French subsidiaries (held at least at 95%) to foreign parent companies.

Please also note that a preliminary ruling is pending before the Court of Justice of the European Union (“ CJEU”) with respect to the 3% contribution. The position of the CJEU is expected as – in a similar case (case C-68/15 X, « Fairness tax ») – the General Advocate of the CJEU concluded that a contribution on Belgian distributions is in conflict with the Parent-Subsidiary Directive.

I.2. International tax

· Tax deferral regime: compliance of the old regime – French Administrative Supreme Court (« CE »), July 19th 2016, n°360352

A preliminary ruling is pending before the CJEU with respect to the compliance of the old tax deferral regime on movable capital gains applicable to individuals (articles 92B and 160 of the FTC applicable before January 1st 2000) with the Merger Directive.

· Belgian tax: Taxation of French real estate companies’ incomes – Court of Cassation (« CC »), September 29th 2016, F.14.0006.F

The Belgian CC reverses its positions and considers that incomes generated by French « look through » real estate companies (article 8 of the FTC), received by Belgian individual shareholders, are not real estate incomes. Consequently, these incomes are not exclusively taxable in France, according to article 3 of the French-Belgian tax treaty signed on March 10th 1964.

· Common Consolidated Corporate Tax Base (« CCCTB »): the European Commission (« EC ») revives its plan

The EC introduced two proposals of Directives with respect to the implementation of the CCCTB. The first one describes some rules for a common tax base (as from January 1st 2019) and the second one focuses on the consolidation of the tax bases (as from January 1st 2021).

· Tax treaty between France and Denmark: negotiations in progress

According to our information, France and Denmark would negotiate the implementation a new tax treaty.

II. INDIVIDUAL TAXATION

· Services provided abroad: requalification on wages and salaries – CE, November 18th 2016, n°386637

A Luxembourg company charged a French company with services provided in France by its shareholder (as a sales agent). Applying the anti-abuse of law mechanism provided by the article 155 A of the FTC, the CE considered that these payments are wages and salaries because of the subordinated relationship between the sales agent and the French company.

· Undisclosed assets held abroad: adjustment on penalties applied – Draft amending finance law for 2016 (article 32)

As from January 1st 2017, the tax penalties applied on spontaneous regularization procedures (25% or 35%) would be replaced by a unique penalty of 80% with respect to tax adjustments regarding a bank account, a life assurance contract or an undisclosed trust.

· Wealth tax: definition of a professional asset – Draft amending finance law for 2016 (article 20)

As from January 1st 2017, assets of subsidiaries and sub-subsidiaries – not necessary for their own activities or for the activity of the holding company – would be no longer assimilated to professional assets for wealth tax purposes. This draft amending finance law aims at counteract the effects of the judgment rendered by the CC on October 20th 2015 (n°14-19598).