French Tax Update - Recently Published Noteworthy Decisions - July 2015

The present French Tax Update will focus on an overview of several noteworthy French tax court decisions issued during the past few months. 

BUYBACK AND CANCELLATION OF OWN SHARES

The tax treatment of buybacks, from the shareholders' point of view, has now been simplified through a change of legislation, i.e., capital gain/loss treatment in all situations (see French Tax Update of January 2015).

In a decision dated April 1, 2015, the Conseil d'Etat ruled on a specific question regarding the tax treatment of a listed issuer that had purchased its own shares, with the initial purpose of using them for existing ESOPs, and that had subsequently decided to cancel them. This change of purpose had resulted in an accounting reclassification of the shares. In the meantime, the issuer had created a reserve, inter alia, to recognize the depreciation of the shares compared to their buyback price. The French tax authorities (FTA) were of the view that the reserve should