Option Finance | February.27.2019
Orrick Paris tax partner Laurent Olleon authored an article on the taxation of the long-term capital profits in the French legal and finance magazine Option Finance. The profit generated by a company on the disposal of capital asset held for a minimum of two years is, in theory, subject to a reduced tax regime (long-term capital profits and losses rate). In theory only, because the French legislator has ruled that certain assets may fall under other provisions. The French highest administrative court (Conseil d’État) has just announced a decision regarding a particular case of taxation rate applicable for company’s tax losses and prior tax losses which might lead to the contrary of the expected result. The consequence is that the company, which expected not only to avoid taxation at the reduced rate, but even any taxation of its long-term capital profits, will be taxed, at the end, at the full standard corporate rate. According to Laurent, this case is a typical illustration of the French proverb where The “better” is the enemy of the “good”.