France Administrative Supreme Court Clarifies Income Tax Treatment of Share Repurchases

The French Administrative Supreme Court Oct. 15 issued Decision No. 495120, clarifying the income tax treatment of share repurchases. The taxpayer, a company engaged in overseas construction, reduced its share capital by repurchasing shares at a redemption price and canceling them. The taxpayer applied the capital gains tax regime, but the tax authorities reclassified the transactions as a distribution of income, assessing a 21 percent flat-rate levy, social security contributions, and penalties. The taxpayer sought to discharge the assessment, which courts denied. On appeal, the Administrative Supreme Court found that: 1) under the General Tax Code, sums or securities that ...