In the event of a contribution of securities from a commercial company by a partner to a holding company, the law provides for a deferral or suspension of capital gains taxation. Walter France's tax working group summarizes the rules that apply.
The securities contributed are valued at their real value on the date of the transaction, the partner who contributes them generally realizes a capital gain. The contribution of securities is therefore a transfer for consideration which is paid for by the delivery of securities from the holding company. On the other hand, contributions of securities generating capital gains, such as the securities of a company subject to IS or those of a transparent company in which the transferor-individual is a simple provider of capital, benefit from a tax deferral. Two cases must be distinguished, depending on whether the beneficiary holding company (subject to the IS) is, at the end of the operation, controlled or not by the provider of the securities. Attention : in the event of an exchange of contributions of securities with balance, the capital gain noted during the contribution transaction is placed on a tax deferred basis when the balance is less than 10% of the nominal value of the securities received. However, the capital gain on the contribution is taxed for the year of the contribution, up to the amount of this balance.
CAS NO 1 :
THE COMPANY BENEFICIARY OF THE CONTRIBUTION IS
CONTROLLED BY THE PROVIDER : REPORT D’IMPOSITION
The conditions of control
A taxpayer is considered to control a company :
• when he directly or indirectly holds, alone or through his family group (conjoint, ascendants, descendants, siblings), the majority of voting rights or rights in the company's corporate profits ;
• when he alone has the majority of voting rights or rights in the social profits of this company under a shareholders' or associates' agreement ;
• when he actually exercises decision-making power. The taxpayer is presumed to exercise this control when he directly or indirectly has at least one third of the voting rights or rights in corporate benefits, and that no partner or shareholder directly or indirectly holds a stake greater than his or her own. otherwise, the taxpayer and one or more persons acting in concert are considered to jointly control a company when they in fact determine the decisions taken at a general meeting.
Tax deferral is automatic
This report is automatic, and the taxpayer has no possibility of avoiding it. Capital gains placed in automatic tax deferral (tax and social security rate) must be determined and taxed according to the basis and rate rules applicable in the year the contribution is made. Only the payment of this tax is deferred to the occurrence of a future event..
End of tax deferral
The tax deferral ends upon transfer for valuable consideration, of the redemption, reimbursement or cancellation of securities received as remuneration for the contribution (the tax deferral is only ended in proportion to the securities sold, redeemed, refunded or canceled) ; or when the taxpayer transfers his tax domicile outside France.
Cession, redemption or cancellation of company securities contributed by the company receiving the contribution within three years
The tax deferral also ends in this situation, unless this company reinvests within a period of two years from the sale at least 60% of the proceeds of the sale in an “economic activity” and the reinvestment is kept for at least one year. Attention : activities of management of movable or real estate assets are excluded.
Donation of securities received as remuneration for the contribution
In the event of donation of securities of the company benefiting from the contribution and control by the donee, the latter becomes the person liable for the capital gain carried forward in place of the donor (still taxable upon the occurrence of one of the events mentioned above), unless he retains the securities of the holding company for a minimum period of five years (see ten years in the event of sale of the subsidiary's securities within three years of the contribution with reinvestment in FCPR, FPCI, SCR, SLP) : in such a hypothesis, capital gains tax is definitively exempt.
Reporting obligations
Certificate from the beneficiary company of the contribution for the benefit of the contributor on the recognition of the tax deferral (to be provided upon request from the administration). Subscription of declaration no. 2074-I (declaration of capital gains with tax deferral) for the year of the contribution. Annual mention of the capital gain whose carryover has not expired in declaration no. 2042 (case 8UT) and 2042 C. Specific formalities are also provided for in the event of the occurrence of an event putting an end to the postponement., reinvestment by the company or donation of securities.
CAS NO 2 :
THE COMPANY RECEIVING THE CONTRIBUTION IS NOT CONTROLLED BY THE CONTRIBUTOR : TAX RELIEF
Tax deferral mechanism
As part of the suspension, the exchange value is neither recorded nor taxed in the year of the exchange. The exchange of securities is seen as a purely interim transaction.
End of tax deferment
The suspended capital gain is only taken into account during the subsequent transfer (or even during the repurchase, refund or cancellation) securities received in exchange for the contribution. The capital gain realized on this date is calculated from the price (or value) of original acquisition of the securities transferred to the exchange (increased or reduced, where applicable, by the balance paid or received before 2017). She can, if applicable, benefit from the reduction for the length of detention (common or reinforced law, calculated from the origin) as well as the flat-rate reduction of 500,000 euros (retirement).
Donation of securities received as remuneration for the contribution
In the event of donation of securities of the company receiving the contribution, the suspended capital gain is definitively served.
Reporting obligations
No obligation for the year of the exchange. It being specified that successive exchanges do not end the tax deferrals.
REFERENCES Case 1 : CGI art. 150-0 B terCas 2 : CGI art. 150-0 B
