Taxation of Shares
The information below, which relates to the tax treatment of dividends, capital gains on disposals of securities, as well as to the solidarity tax on wealth and the tax on financial transactions, corresponds to the tax scheme currently in effect. These provisions are general in nature, are provided by way of illustration at the publication date and may change at any time due to regulatory changes. Any new tax measure may have an impact, without prejudice to your being subject to the tax rules detailed in this communication. Shareholders are advised to go to the administration or consult with their normal adviser for any additional information that is specific to their situations.
GDF SUEZ cannot make promises as to the accuracy, exactness and completeness of the information issued and cannot be held liable for consequences linked to how shareholders use the information contained herein.
GDF SUEZ cannot be held liable for losses or damages which could arise directly or indirectly due to the content of this communication or the use made thereof.
This update takes into account the tax impacts of the 2013 finance law, which was adopted by Parliament on December 20, 2012, as well as the 2013 law on financing social security. The broad lines of these provisions are presented in the January 2013 tax notice published by Société Générale Securities Services, which has been mandated by GDF SUEZ to manage its registered shares (download here in French)
Update on tax provisions linked to the shares.
Article 4 B of the general tax code provides that in order to be considered as domiciled for tax purposes in France, an individual must fulfill one of the following four criteria:
- Have his/her family household in France, household being considered the place where the person usually resides and the center of his/her family interests (i.e. the place where husband, wife and children live, for example);
- Have his/her primary residence located in France: it is sufficient for a person to have resided in France for more than 183 days during a given year to be considered to have his/her primary residence in our country for the year in question, except if, during the course of a year, a person acquires his/her domicile in France or transfers his/her domicile for tax purposes outside of France, in which case the place of residence for tax purposes automatically changes;
- Perform a professional activity primarily in France, whether salaried or not, which criterion is assessed with regard to the duration of employment or the salary collected;
- Have the center of his/her economic interests in France, in other words the place where the person has his/her business headquarters, where said person makes/has made his/her primary investments, where s/he has his/her personal or real property, where s/he manages that property etc.
It is sufficient that one of these four criteria be met in order to be considered as domiciled in France, subject to the provisions of the tax treaties signed by France.
INDIVIDUAL SHAREHOLDERS RESIDING IN FRANCE FOR TAX PURPOSES
Shares may generate two types of gains:
- Dividends: share of the profit distributed to shareholders according to the company’s results;
- Capital gains: difference between the purchase price and the resale price of your shares, if the sale price is greater than the purchase price (in the opposite case, we speak of ‘capital loss’).
When calculating income tax, only dividends and capital gains are taken into account. According to the current French legislation, shareholding is in and of itself not taxed and does not need to be declared (this is not the case for the wealth tax – see below).
Taxation of dividends (excluding holding under a Personal Equity Plan [PEA])
Dividends were able to be subject, through December 31, 2012, at the discretion of the shareholder or individual beneficiary French tax resident, to a 21% flat-rate withholding tax. If not opted for, dividends were subject to the progressive income tax scale, upon application of a 40% rebate and an annual fixed rebate (€1,525 or €3,050, according to the shareholder’s family situation), as applicable.
The 2013 finance law abolished the option of a flat-rate withholding tax for income received as of January 1, 2013.
The fixed rebate of €1,525 or €3,050, applicable for dividends, according to the taxpayer’s family situation, is retroactively abolished as of January 1, 2012.
The proportional rebate of 40% remains in effect.
The 2013 finance law establishes a mandatory levy as an income tax installment payment, deducted at source by the paying institution for income paid to individuals who are domiciled in France for tax purposes. This mandatory withholding as an installment payment is levied at the rate of 21% on dividends.
Households with a reference tax revenue of less than €50,000 (individuals only) or €75,000 (couples subject to joint taxation) for the year before the last year preceding the one the revenue was collected may be exempt from the dividend installment charge. In order to benefit from this exemption, they must submit a request at their bank by November 30 of the year preceding the one the income was collected at the latest, producing a sworn statement (see statement model, which can be downloaded from Nominet for directly registered shares held).
For 2014 income, a request for dispensation must be made by November 30, 2013 at the latest and takes effect as of the date when it is formulated. This corresponds to the date the SGSS offices receive the request, along with the supporting and related documentation, duly filled out (registered shareholders only).
Bearer shareholders are asked to consult with their financial intermediary for the procedures relating to this request for exemption.
The partial deductibility rate for the general social contribution [contribution sociale généralisée (CSG)] on revenue from capital taxed according to the progressive income tax scale has been reduced from 5.8% to 5.1%, a rate which is applicable to business revenue. This measure is applicable as of the assessment of 2012 income.
Social security charges (15.5%) are deducted at source for all distributed revenue (and no longer just for those eligible for the 40% rebate).
The Taxation of Capital Gains
Scheme under Common Law
- Capital gains on disposals made as of January 1, 2013
Gains on the disposal of securities and individuals’ ownership rights shall be heretofore taxed according to the progressive income tax scale.
Capital losses remain taxable only on capital gains of the same nature earned in the same year or in the following ten years.
Social security charges at the rate of 15.5% remain due as of January 1, 2013.
The 2013 finance law introduces a proportional and progressive rebate depending on the duration securities are held (shares and unit in companies, strips or instruments representing corporate shares or units), which favors long-term holding.
This rebate is 20% for a holding period of between two and less than four years, 30% for a period of between four and less than six years and 40% for a holding period of at least 6 years.
This rebate is applicable as of January 1, 2013, taking into account the actual duration of holding before this date; in other words, as of the date of acquisition or subscription of the instruments concerned.
- Capital gains from disposals completed as of January 1, 2012
Capital gains on the disposal of shares are heretofore subject to Income Tax [Impôt sur le Revenu (IR)] and to social security charges, regardless of the amount of the disposals carried out during the year per tax household. As a reminder, the tax threshold for both Income Tax and social security charges has been abolished.
Furthermore, the 2012 amending finance law retroactively amended the rate of social security charges applicable to capital gains on the disposal of securities made as of January 1, 2012 from 13.5% to 15.5%.
The 2013 finance law likewise set the fixed tax rate to 24%, compared with the previous 19% for capital gains for the 2012 fiscal year alone.
Therefore as of the 1st euro disposed of, the overall tax rate of 39.5% (i.e. 24% income tax + social security charges moving from 13.5% to 15.5%) shall be levied on all of the capital gains earned as of January 1, 2012.
Capital losses on disposals carried out since January 1, 2002 may be deducted from capital gains of the same nature that are performed during the year of disposal or the next ten years. This possibility is now available as of the first euro disposed for net capital losses recorded as of 2011.
- Capital gains on disposals carried out prior to January 1, 2012
Special scheme for personal equity plans (PEA)
GDF SUEZ shares are eligible for a PEA. The limit for payment into the PEA is 132,000 euros (264,000 euros for a couple).
Under certain conditions, the PEA provides entitlement:
• During the term of the PEA, to a tax exemption on revenue and social security charges due on net income and net capital gains generated by investments made in the context of the PEA, provided that, notably, this income and these capital gains are kept in the PEA;
• at the time of closing the PEA (if this occurs more than five years after the date of opening the PEA) or during a partial withdrawal (if this occurs more than eight years after the date of opening the PEA), to an income tax exemption due to the net profit earned since opening the plan. This income or these capital gains nevertheless remain subject to social security charges at the rate in effect at the date the profit is earned.
Income collected in the context of a PEA no longer provides entitlement, as of the taxation of 2010 income, to a tax credit equal to 50% of the dividend and limited to 115 euros or 230 euros depending on the beneficiary’s family situation, this tax credit having been generally abolished.
Capital losses on shares held under the scope of the PEA are in principle only taxable for capital gains earned under the same scope. However, in the event of an early closure of the PEA before the expiry of the 5th year, or as of January 1, 2005 in the case of a closure of the PEA after the 5th year, the capital losses recorded may be allocated, under certain conditions, to gains of the same nature earned outside of the plan (on an ordinary securities account) for the year of closure or the ten years following.
Should the PEA be closed before a period of five years, the dividends and capital gains earned shall be taxed at the following rates (as of the 1st euro disposed as of January 1, 2011):
|Taxation of Dividends and Capital Gains in the Context of a PEA|
|Social Security Charges|
|Term of the PEA ||General Welfare Contribution ||Social Security Charge||Solidarity Charge||Social Debt Repayment Contribution ||Additional Contribution||Income Tax||Total|
|Less than 2 years||8,20%||4,50%||2%||0,50%||0,30%||22,50%||38,00%|
|between 2 and 5 years||8,20%||4,50%||2%||0,50%||0,30%||19,00%||34,50%|
|More than 5 years||8,20%||4,50%||2%||0,50%||0,30%||-||15,50%|
Since March 20, 2012, a shareholder’s transfer of his/her domicile abroad for tax purposes no longer results in the PEA being automatically closed.
Tax on Financial Transactions
By applying the 1st amending finance law for 2012 and as of August 1, 2012, financial intermediaries (brokers or account holders, as the case may be) charge a 0.2% tax on the acquisition value of capital securities accepted for trading on a French, European or foreign regulated market, issued by a company whose registered office is located in France and whose market capitalization exceeds €1 billion as of January 1 of the tax year. This tax on financial transactions applies, except in cases where there is a legal exemption, to security acquisitions only.
Acquisitions of new securities within the context of a capital increase fall within the field of application of the tax, but may nevertheless be exempt, under the terms provided for by the law.
Solidarity Tax on Wealth
Shares held by individuals as part of their private assets shall be included in their taxable assets and, where applicable, incorporated into the calculation of the solidarity tax on wealth [impôt de solidarité sur la fortune (ISF)]. The value to be declared is at the taxpayer’s discretion: either the latest stock market price as of December 31, 2012 (15.575 euros) or the average of the stock market prices during the last 30 days of the calendar year (16.1253333 euros).
(Source: Société Générale Securities Services).
Several significant changes took effect in 2012, including:
- New methods of filing and paying the solidarity tax on wealth for taxpayers whose net taxable assets as of January 1, 2012 is greater or equal to €1.3M and less than €3M: they declare the amount of these assets with their income tax return (form 2042 C), are exempt from attaching the appendices or supporting documentation to their return and will pay the 2012 solidarity tax on wealth upon receipt of a tax notice;
- New methods of taxation (the rate of the solidarity tax on wealth is 0.25% or 0.5% according to the net taxable value of the assets, and this rate applies as of the 1st euro of assets).
Furthermore, the 2nd amending finance law for 2012 establishes an exceptional contribution on wealth, payable by persons subject to the solidarity tax on wealth in 2012. This contribution concerns people who as of January 1, 2012 hold net taxable assets of at least 1,300,000 euros.
The exceptional contribution is based on the net taxable value of assets used for calculating the 2012 solidarity tax on wealth.
The 2013 finance law establishes a new reform of the solidarity tax on wealth (ISF). This reform translates to an increase in the applicable fee, along with the reestablishment of the tax ceiling.
The ISF due as of 2013 shall be calculated by applying a progressive scale in sections, comprised of six sections ranging from 0.5% to 1.5%. The tax threshold is set at €1,300,000.
|Fraction of net taxable wealth ||Applicable rate|
|Less than €800,000 ||0|
|Greater than €800,000 and less than or equal to €1,300,000||0,50|
|Greater than €1,300,000 and less than or equal to €2,570,000||0,70|
|Greater than €2,570,000 and less than or equal to €5,000,000||1|
|Greater than €5,000,000 and less than or equal to €10,000,000||1,25|
|Greater than €10,000,000||1,50|
Additional income tax contribution
Article 2 of the 2012 finance law dated December 28, 2011 has created an additional income tax contribution, based on the reference tax income of a tax household liable to income tax. This contribution is calculated by applying a rate of between 0% and 4%, as the case may be, and is applicable as of the 2011 income tax.
SHAREHOLDERS WHO ARE NOT FRENCH RESIDENTS FOR TAX PURPOSES (excluding Belgium)
Taxation of dividends
The dividends distributed by GDF SUEZ are in principle subject to 30% deduction at source, deducted by the institution paying the dividends on the payment date, when the shareholder’s domicile for tax purposes or the actual beneficiary’s registered office is located outside of France1.
However, this deduction at source may be reduced or eliminated (in general by 15%) by applying the international tax treaties signed by France. In their capacity as shareholders who are not residents for tax purposes, who benefit from the payment of dividends from a French source, such shareholders may apply for the option to benefit from a direct payment at the rate provided by the tax treaty linking France and their country of residence, in compliance with the Official Tax Bulletin of February 25, 2005.
Shareholders must also provide the original copy of tax residence declaration 5000, duly filled out and certified by them and by the Tax Administration of their country of residence.
This so-called “simplified” procedure provides for the provision, before payment of the dividend, of a certificate with a valid term of one year corresponding to the current calendar year during which it was issued by the foreign tax administration.
The original copy of this document must be sent, filled out and signed, to the institution paying the income as soon as possible and, in any case, before the 1st coupon is cashed. For the USA, form 5000 may not be certified; conversely, it is up to the shareholder to obtain and submit an original form 6166, issued for the reference tax year. If this is not done, the dividends shall be subject to a 30% charge (Article 119 (b) II of the General Tax Code).
Shareholders may therefore subsequently benefit from a “standard” tax recovery procedure.
Shareholders must therefore submit conventional recovery forms (tax residence certificate 5000 + form “Liquidation of at-source deductions” 5001, which are available online and in six languages on the website www.impots.gouv.fr) in order to obtain a reimbursement for the differential of at-source deduction, provided that the necessary procedures are carried out within a general time limit of 2 years (Article R-196-1 of the Book of Tax Procedures).
The tax credit of 115 euros or 230 euros, according to the beneficiary’s family situation, provided for in Article 200 (7) of the General Tax Code, which could in theory be transferred to beneficiaries who are not residents for tax purposes, by application of the tax treaties, is abolished for taxes that have been paid for 2010.
1 The rate of at-source deduction on interest and dividends paid in a Non-Cooperating State or Territory [Etat ou Territoire Non Coopératif (‘ETNC’)] is raised to 75% (compared with the previous 50% for interest and 55% for dividends).
The increase in the rate of at-source deductions is applicable to income received or capital gains earned as of January 1, 2013.
Taxation of Capital Gains
Subject to the provisions of potentially applicable international tax treaties, the capital gains earned when people who are not domiciled in France pursuant to Article 4B of the General Tax Code dispose of their shares, are not, in general subject to tax in France (see definition of the concept of French tax resident, above).
It should be noted that gross disposal amounts are declared to the General Office of Public Finance.
Solidarity Tax on Wealth
Individuals who do not have their domicile for tax purposes in France pursuant to Article 4B of the General Tax Code, as defined above, are not subject to the solidarity tax on wealth in France for their financial investments. This measure includes investments whose products, whatever their nature is, fall into the category of revenue from investment income. However, equity interests are not considered financial investments and are thus subject to the solidarity tax on wealth, without prejudice to the provisions of international tax treaties.
Appendix 1: Breakdown of Current Social Security Charges
- The 8.2% General Social Contribution (CSG), 5.1 points of which are deductible from the total taxable income for the year it is paid;
- The 4.5% social charge on capital revenue, not deductible from the income tax base;
- 2% solidarity charge
- 0.5% social debt repayment contribution (CRDS), not deductible from the income tax base.
- Additional 0.3% contribution
|Current Social Security Charges|
|CSG||Social Charge||Solidarity Charge||CRDS||Additional Contribution||Total|
It should be noted that the rate of the social charge was dropped from 5.4% to 4.5% and that the additional CRSA contribution (1.1%) was abolished under the law on financing social security dated December 17, 2012. A new “2% solidarity charge” contribution has been established.
Appendix 2: Taxation of Dividends as of December 31, 2012
Establishment of the option to tax dividends received since 2008 via a flat-rate withholding tax is retained for dividends received in 2012.
Therefore, for dividends paid as of January 1, 2012, the taxpayer could choose to have his/her dividends taxed according to the progressive income tax scale (general scheme) or choose the flat-rate deduction of tax scheme [prélèvement forfaitaire libératoire (PFL)].
Furthermore, the first 2012 amending finance law increased the rate of social charges on dividends received as of July 1, 2012.
This is the scheme that is applied by default insofar as shareholders do not expressly choose the PFL scheme.
Dividends in this case are taken into account to determine the taxpayer’s total income, subject to the progressive income tax scale, in the category of property income for the fiscal year of the payment.
The taxpayer benefits under this scheme, before the taxation of his/her dividends, on the one hand from a 40% rebate on the gross amount of the dividend and additionally from an annual fixed rebate, after the application of the 40% rebate of 1,525 euros for a single person or 3,050 euros for a couple that is subject to joint taxation.
Conversely, as of the income received for the 2010 financial year, the taxpayer no longer benefits from a tax credit equal to 50% of the amount of the dividend received (i.e. before applying the aforementioned rebates), limited to 115 euros per single person or 230 euros for a couple that is subject to joint taxation.
Furthermore, the amount of income distributed prior to applying the rebates is subject to at-source social charges, totaling 15.5% for income received as of July 1, 2012 (see appendix for a breakdown of the social charges).
Optional Flat-Rate Deduction of Tax Scheme (PFL)
Shareholders may opt for PFL on dividends at the rate of 21% for income received as of January 1, 2012 (19% for income received through 12/31/2011), these dividends thus not being taken into account to determine the overall income of shareholders.
This option must be expressly stated in writing to the paying institution prior to cashing income on their behalf, and was [sic] irrevocable for the payment concerned.
• Should PFL be chosen, the latter is calculated on the gross amount of dividends without the rebates mentioned above concerning the general scheme that could be applied;
• A shareholder who opts for PFL in a given year, even on a single encashment, will lose, for all of the dividends received (including those subject to the progressive scale system), the tax rebates and credits mentioned above which fall within the general scheme.
Furthermore, at-source social charges, totaling 13.5% for income received as of January 1, 2012 until June 30, 2012, then 15.5% for income received as of July 1st, 2012, likewise apply to the dividends subject to PFL. Conversely, unlike dividends that are subject to the progressive scale, no portion of the CSG is deductible from the overall income.
The overall tax rate when the flat-rate deduction of tax is chosen thus totaled 34.5% of the gross amount of dividends received as of January 1, 2012 through June 30, 2012, and 36.5% as of July 1st, 2012.
Appendix 3: Taxation of Capital Gains on Disposals Prior to January 1st, 2012
• Capital gains on disposals made as of January 1st, 2011
Capital gains on disposals of shares are now taxable both for Income Tax (IR) and for social charges, regardless of the amount of disposals made during the year per household (abolition of the tax threshold both for Income Tax and social charges).
Furthermore, the 2nd 2011 finance law retroactively amended the rate of social charges applicable to capital gains on disposals of shares made as of January 1, 2011.
Therefore, as of the 1st € disposed of, all of the capital gains earned as of January 1st, 2011 were subject to the overall tax rate of 32.5% (i.e. income tax went from 18% to 19% + social charges, which went from 12.3% to 13.5%).
Capital losses on disposals made since January 1, 2002 may be deducted from capital gains of the same nature that were made during the year of disposal or the next ten years. This possibility is now available as of the first euro disposed for net capital losses recorded as of 2011.