Capital losses from disposals incurred in 2017 may be deducted from capital gains of the same nature realised during the year of transfer, or in the 10 subsequent years. This option was open from the first euro resulting from disposals for net capital losses, reported from 2011.
However, the finance law for 2018 stipulates that capital losses may only be imputed to capital gains realised in the same year. Taxpayers can thus no longer decide against imputing their losses by deferring them to subsequent years.
SUEZ shares are eligible assets for PEA.
With PEAs, tax benefits are acquired at the end of the fifth year (for a standard eight-year term). If you do not make any withdrawals before the end of the fifth year, the shares you hold in this account will be exempt from income tax (excluding social security contributions) on the realised capital gains and dividends. Since 1 January 2019, if you make a withdrawal before 5 years, the tax rate applied is the flat rate tax of 12.8% (previously, the tax rate was 19% for a withdrawal between 5 and 8 years, and 22.5% for a withdrawal within 2 years). Note that the payment limit of PEAs has been €150,000 (€300,000 for couples) since 1 January 2014.
Income from PEAs is subject to social security contributions, irrespective of the date of the withdrawals. In this respect, the gains acquired or recorded in a personal equity plan (PEA – France) as of 1 January 2018 are subject to social security deductions at the prevailing rate on the day of repurchase (17.2% as of 1 January 2018) and not on the day of recording, as was the case before 1 January 2018 (principle of "historical rates").
It should also be noted that, under the French PACTE law, changes have made the PEA even more favourable, by abolishing the early closure of the PEA in the event of partial withdrawal within five years. Similarly, withdrawal after five years no longer takes away the right to make further contributions.
Finally, since only individuals resident in France for tax purposes can open a PEA, the PACTE law provides for the creation of a Young people’s PEA for young adults (aged between 18 and 25) included in their parents’ tax household, limited to a maximum of €20,000, increasing to €150,000 when the holder leaves the tax household. The aim is to encourage young adults to invest in equities.
Pursuant to article 115-2 of the French tax code, the free allocation by SUEZ of Company shares (or, where applicable, of allotment rights to fractional Company shares) to its individual shareholders, is not considered to be a distribution of income from movable assets.
The profit from these preferential provisions is not subject to any condition for individual shareholders residing in France.
The cost basis of Company shares (or allotment rights to fractional Company shares) received as part of the Contribution-Distribution operation is equal to zero.
The attention of shareholders is drawn to the fact that this presentation is a summary of the currently applicable tax system. It is not intended to constitute a complete analysis of all the tax consequences that could apply to a shareholder. It is therefore recommended that shareholders consult their usual tax advisor in order to study their specific situation.
The following provisions present the main tax consequences applicable to individuals who hold securities in their private assets and do not carry out stock market operations on a regular basis.
“Taxation of shares abroad” refers to “Individual shareholders who are not tax residents in France”.
Dividends distributed by the Company to individuals who are not tax residents in France are in principle subject to a withholding tax of 12.8% for dividends paid from 2018 onwards; the 30% rate previously in effect now applies only to legal entities.
However, this withholding is often reduced under international tax treaties. It is the responsibility of the shareholders concerned to contact their tax advisors to determine whether such treaty provisions may apply to their particular situation and determine the practical application of these conventions.
Focus on individual shareholders resident in Belgium:
The fiscal letter of 2017, attached, remains applicable except for the rate of deduction at source, which is 12.8% as of 2018 (against 30% previously).
It is specified that the allocation of Company shares or, where applicable, of allotment rights to fractional Company shares, to SUEZ shareholders whose tax residence is not in France is not subject to any withholding tax in France.
Focus on individual shareholders resident in Belgium:
By its decision no. 00.538 of 27 May 2008, the Advance Tax Ruling Service (“SDA”) of the Belgian federal public service for finance has indicated the following, for the application of the 1992 Income Tax Code (CIR – Code des impôts sur le revenu):
As a result of this decision, the free allocation of Company shares by SUEZ to its shareholders who are tax residents in Belgium must be considered as a reimbursement by SUEZ of share issue premiums considered as released capital, up to the limit of the market value of the Company share, as valued on the day of distribution (this market value being fixed, on the basis of its first opening list price).
This process will also be applicable to allotment rights to fractional Company shares, it being specified that each allotment right will be valued at a quarter of the Company share’s market price as defined above.
The SDA indicated, in essence, that if the Belgian accounting process implies processing the operation as a neutral reorganisation from an accounting point of view, the difference that may surface between the accounts value and tax value of SUEZ shares and Company shares will not make either taxable profits or tax-deductible charges possible and is therefore neutral from a tax point of view. The capital gains and losses realised by these shareholders at the time of subsequent disposal of shares will, for the application of tax provisions, be calculated on the basis of the tax value of the shares, on completion of the distribution.
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