SIIC

This tax regime allows companies to benefit from a full exemption from corporate income tax under certain circumstances. Profits generated by letting real estate assets, as well as those derived from gains on the sale of these assets are tax exempt - provided the companies enact the following distributions:

• 85% of profits from letting
• 50% of capital gains
• 100% of the distributions of profits received from SIIC subsidiaries

Full exemption for profits generated by the SIIC's main business activity

The following are fully exempt from corporate income tax:

• Profits generated by letting buildings
• The capital gains realised on the sale of buildings
• The capital gains realised on the sale of interests in tax-transparent real estate subsidiaries with the same main corporate purpose as the SIIC
• Dividends received from eligible subsidiaries

These profits are known as SIIC profits.

This tax exemption applies to income from real estate assets ("immeubles"), to profits generated by sub-letting buildings held through financial leases and to capital gains from the disposal of real estate financial lease contracts.

Companies applying for SIIC status, or which merge with a SIIC, are subject to an exit tax. This is treated in the same way as a liquidation tax and levied at a rate of 19% on net unrealised gains and on tax-exempt reserves.

Taxation of ancillary business activities

Profits generated by ancillary business activities, or dividends received from a subsidiary that has not opted for the tax regime (that is, non-SIIC profits), are liable to pay French corporate income tax at the standard rate (33.33%).

SIIC mergers and reorganisations

SIICs benefit from a specific tax regime that allows reorganisations such as mergers and spin-offs involving SIICs to occur without causing detrimental tax consequences. This neutral tax regime requires the surviving company to undertake certain distribution commitments previously held by the absorbed entity. They will also be required to distribute at least 50% of the merger premium (boni de fusion) and 85% of the capital gain resulting from the contribution of the real estate assets.

Tax situation of SIIC shareholders

General tax regime for individuals

French residents are liable to tax on dividends received from SIICs under general personal income tax rules. Therefore, French residents benefit from a 40% rebate on dividends received from SIICs. This means that 40% of SIIC profits distributed to French residents are exempt both from corporate income tax and from personal taxation.

They also benefit from a limited tax reduction (capped at €230 for married couples and €115 for single individuals) and a tax rebate of 50% (capped at €1,525 for single individuals or €3,050 for married couples).

French residents may however opt to be taxed at source at a rate of 18%. In this case they do not benefit from the 50% tax rebate. Whichever option they choose, they are liable to social contributions (11%) on the dividends received.

In addition, the shares in a SIIC are eligible for share savings plans (plan épargne en actions). These allow full exemption from personal taxation if certain conditions are met.
This summary of the tax situation of French resident individuals states the most common cases and each individual situation has to be checked.

Corporate shareholders

Dividends that are paid out of exempted profits do not benefit from the parent/subsidiary tax regime.

Cofinimmo obtained its approved SIIC status on 04.08.2008.