Registration duties: latest comments from the French Tax Authorities on the new tax regime of transfer of shares in a company

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The Finance Act (28 December 2011) and the Amended Finance Act (14 March 2012) for 2012 modified significantly the treatment of registration duties applicable to the transfer of shares in listed and non listed companies. Since 1 August 2012, new rates have come into force, new exemptions are applicable and the geographic scope of registration duties has expanded significantly. A tax regulation (7 D-1-12), dated 3 August 2012, specified these reforms.

Preliminary Explanations in relation to Taxable Transactions -

Transfers of shares stricto sensu are subject to registration duties, except for transactions without consideration and/or transactions that do not lead to a transfer of ownership. In this respect, the French Tax Authorities specify that even though the issuance of a bond exchangeable or convertible into existing shares does not constitute a transfer of shares, the conversion or exchange of bonds for existing shares does constitute a transfer of shares which leads to transfer the ownership of the shares and whose payment is made through offsetting the bondholders’ receivable and which is thus subject to registration duties.

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