Tax relief for shareholders up to 35% of profits or net
revenue subject to corporate tax or personal income tax.
Tax relief on profits reinvested back into the company up to a
limit of 35% of taxable corporate profits.
Profits that are
reinvested are to be recorded in a special investment reserve
account under the liabilities column of the balance sheet
before the deadline for submission of the definitive tax
return relating to profits for the year in which the deduction
is taken and added to corporate capital no later than the end
of the year in which the reserve is set up.
The corporate tax
return must include the schedule of investments to be made «and
a commitment by those taking advantage of the deduction to
follow through with investment by the end of the year in which
the reserve is set up».
Assets acquired in
the framework of investment cannot be sold until at least one
year after the date of effective start up of production
Capital should not
decrease for the first five years following the date on which
profits and income have been invested, unless a reduction is
required to absorb losses
« Subject to the
terms of articles 12 and 12a of law n° 89-114 of 30 December
1989, which promulgates the code governing personal income tax
and corporate tax, the following items can be deducted from
the tax base for both personal income tax and corporate tax:
income or profits that are reinvested in acquisition of
corporate assets or acquisition/subscription of stock or
shares leading to holdings of at least 50% of capital in the
framework of voluntary transmission by a company following
death, inability to pursue management of the company, or
retirement as outlined in article 11a of the tax code for
personal income tax and corporate tax as well as in the
framework of ongoing activity or transmission as outlined in
law n° 95-34 relating to recovery at companies encountering
economic difficulties as further elaborated and modified by
subsequent texts, up to 35% of income or net profits subject
to personal income or corporate tax. These terms do not apply
to transactions to acquire or subscribe to stock or shares (in
the framework of ongoing activity or transmission as outlined
in law n° 95-34 mentioned above) by company directors and by
the associate who holds the majority share of capital at the
date of acquisition or subscription. Calculation of the rate
of holdings for the associate with the majority share in
capital takes into account the associate’s direct and indirect
holdings as well as those of his or her spouse and adult
children. »
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