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Transfer of assets: beware of abusive arrangements



The contribution-assignment is a transaction prior to the transfer of a company that grants you unavoidable tax advantages. However, the tone is getting tougher on the front of the jurisdictions and the tax administration regarding the application of these mechanisms. Remember Article 150-0 B of the General Tax Code (CGI), which applied to capital gains realised before 14 November 2012 and allowed for a deferral of tax payment on the contribution of shares in a company to another company that were resold a short time after the said contribution, the deferral being maintained until the sale of the shares handed over in exchange. Two recent decisions have qualified transactions carried out in application of this article as an abuse of tax law:

The first decision considered that it was appropriate to compare the investments made with the proceeds of the sale of the shares by the company receiving the contributions to all the sums that benefited from the tax deferral, the contributor having benefited to a large extent in terms of dividends from the proceeds of the sale (CE, 27 June 2022, n°449656); The second calls into question the entire contribution-transfer transaction because of the payment of a balance, the amount of which, although lower than the 10% allowed by the text, was used for purposes that do not fall within the spirit of the law (CAA Lyon, 5 May 2022, 20LY01202).

Article 150-0 B ter of the CGI granting a deferral of taxation to capital gains resulting from transfers made after 14 November 2012 is not left out either! In its hunt for abuse of law, the tax authorities have just published a 25th sheet to enhance their "map of abusive practices and arrangements". It describes the following fraudulent procedure: "An individual contributes all the shares of an operational company A that he owns, with a total value of €10 million, to a holding company B created ad hoc that he controls. The capital gain on the contribution is placed on a tax deferral basis, in accordance with the provisions of Article 150-0 B ter of the CGI. Shortly thereafter, the beneficiary holding company B sold all of the A shares to a company C, a holding company newly created by an investment fund and intended to take over company A as part of an LBO, for a price of €10 million. Within two years of the sale, company B invests the proceeds of the sale of the shares up to €6 million (60% of the sale proceeds) in a capital increase of the takeover holding company C, by offsetting a receivable representing the sale price to be received by company B in the context of a vendor loan granted to the transferee company C.

It should be remembered that the penalty applicable to abuse of rights is, in addition to interest for late payment, the application of an 80% increase (reduced to 40% in the event of spontaneous rectification) in the tax assessments. These arrangements, although advantageous, are under scrutiny and must be used with the utmost caution. Clarelis Avocats is at your side to assist you in these complex operations.


Gaëlle Bréard

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