Personal Income Tax

In a recent Instruction, the French Tax Authorities comment the new rules regarding the offset of non-professional losses at the level of the global income. Indeed, losses resulting from industrial and commercial earnings may not longer be allocated on the global income when they result from non-professional activities, that is to say when these activities do not include personal, direct and continuous involvement of a member of the tax domicile. These losses can only be allocated on the profits withheld from activities with the same nature during the same year or the five following years.

Therefore the aim of the rule enacted by Article 156-1-1 bis of the French General Tax Code, coming from Article 72 of the Finance Law for 1996 is to cancel the use of some tax optimization schemes. It concerns in principle all losses or parts of losses of activities created, taken over, spread out or attached as of January 1st, 1996, as well as the part of the losses coming from new