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European Overview


1.- President Macron’s main tax measures

The main tax measures in Mr Macron’s presidential program are as follows:

  • Corporate tax reduced from 33.33% to 25% by 2022,
  • Solidarity Wealth Tax (Impôt de Solidarité sur la Fortune (ISF)) changed to wealth tax on property,
  • Introduction of a 30% flat tax on income from movable assets,
  • Abolition of housing tax for 80% of French households,
  • Application of income tax withholding deferred to 2019.

2.- Criticism of proportional penalty for failure to report a trust

Following submission of a priority question on constitutionality (QPC), the French Constitutional Council ruled on the Constitutional compliance of the penalties provided for in IV bis of Article 1736 of the French General Tax Code (CGI). This regime requires the administrator of a trust to report the trust to the French tax authorities if said administrator, the principal or one of the beneficiaries is resident in France for tax purposes or if the trust relates to assets located in France.

In the event of failure to report a trust, the administrator is liable to a penalty of €20,000 (€10,000 in the pre-2013 version) or if it is higher, an amount equal to 12.5% (5% in its pre-2013 version) of the assets or rights placed in the trust and the accumulated earnings thereon.

By a decision of 16 March 2017, no. 2016-618 QPC, the Constitutional Council ruled that proportional penalties of 12.5% (and 5% in the pre-2013 version) are anti-Constitutional.

Fixed penalties of €20,000 (or €10,000 before 2013) remain applicable however.



1.- New taxation of real estate gains realized in Germany by residents of France

The 1959 Franco-German tax treaty has been modified by an amendment which came into effect in 2016. The new text changes the taxation of gains on sales of real estate realized in Germany by residents of France. In future, profits generated from the sale of real estate located in Germany but belonging to French residents will also be taxable in France, whereas previously they were totally exempt.

Double taxation is avoided by charging the German tax to the French tax. However, when the German tax is nil (as is the case when the real estate has been held for 10 years), the French tax is payable in full by the vendor.

This is a harsh blow to French investment in real estate in Germany. Fortunately, such investment is still interesting for many other reasons.

2.- GmbH as legatee: double taxation

A person had named a GmbH in his will as sole heir to his estate, and this estate was to be used to finance the company’s business. Following the death of the deceased, the treasury had not only charged inheritance tax on the estate, but had also deemed the inherited estate to be taxable income for the GmbH, and had therefore charged it corporation tax.



New legal matrimonial regime from 01.01.2018

In the Netherlands, Matrimonial Law will change on 1 January 2018. Full community of property will no longer apply, but for those couples who marry after 1 January 2018, a ‘smaller’ community property regime will apply. The main points are:

  • Assets and debts that the spouses had before the marriage will no longer be part of the community property;
  • Inheritances and gifts (received by the spouses before and during the marriage) will no longer be part of the community property.

The system in the Netherlands will then be more aligned to the mainstream European systems, but again, only for couples marrying after 1 January 2018.



Challenging notarization in the case of companies with a simplified structure

In Switzerland, all important acts in a company’s social life (constitution, amendment of articles of association, capital increase, change of company name or registered office, etc.) require the involvement of a notary. However, the Federal Council has submitted a bill to Parliament challenging this principle in the case of «companies with a simplified structure».

Typically, such companies would simply have articles of association whose content meets the strict minimum requirements laid down in the Swiss Code of Obligations (Code des obligations).

The Swiss Federation of Notaries will have the tricky task, seen time and time again, of convincing MPs that notarial involvement upstream is far better than litigation downstream…■


-By Lexunion International Law Firms Group-

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