Abstract EN:

The transmission of securities without payment results from transactions of an extraordinary nature yet which are however frequently encountered : mergers, splits, redistribution of shares following a partial contribution of assets, capitalization of reserves. The tax position of the shareholder is not generally taken into account. At best, the capital gains tax regime is taken into consideration. However securities income remains badly understood or simply not though of. Too often in practice there is a tendency to forget that taxation and not exoneration is the rule. However the principle of taxing the shareholder on securities income subsequent to the transmission of securities without payment, based on the + theory of the balance sheet ;, has its roots in statutes going back to the end of the last century. Pursuant to section 109-1 subsection 1-10 of the fiscal code the shareholder receives a dividend together with a tax credit when the transaction is governed by normal tax rules. His tax position depends on his status and the type of transaction. Section 109-1 subsection 1-1 of the code allows for automatic exoneration for capitalization of reserves. Section 115 of the code grants a qualified exoneration, which is automatic in the event of a merger, frequent in the case of splits and purely illusory in the case of partial contribution of assets. When normal taxation is rule the corporate shareholder and in particular the parent corporation is in a most enviable position, subject to additional cost linked to the calling into question of the parent subsidiary exemption regime or the tax consolidation regime. Individual shareholders are imposed on a progressive tax scale. Non resident shareholders are treated on greatly differing and unequal terms depending on their state of residence. When exoneration does occur, taxation still occurs through the mechanism of indirect or deferred taxation.