Long Term Investment Incomes

The law giving various provisions from an economical and financial standpoint (DDOEF), published in the "Journal Officiel" dated April 13, 1996, includes significant provisions relating to the tax treatment of exchange rate agreements or exchange currency agreements held by credit institutions (Swaps). On the one hand, it specifies the field of application of article 38-bis-C of the French General Tax Code, the aim of which is to adjust the tax treatment of these incomes to their accounting treatment. On the other hand, the legislator sets the rules applicable in case of change of appropriation of such agreements.

It must be reminded that article 38-bis-C of the French General Tax Code adapts the tax treatment of interests rate exchange agreements concluded by credit institutions to the accounting rules promulgated by the Committee of Bank Regulations. Therefore the "speculative" agreements (agreements in an isolated open position) and the "macro hedging" agreements (allocated to