Nice Court of First Instance (Tribunal de Grande Instance) / Sale of foreign companies' securities mainly in real estate in France: exemption from transfer taxes

Sale of foreign companies' securities mainly in real estate in France: the Nice Court of First Instance invalidated the tax authorities' position and stated that the law relating to liability for transfer taxes was against the law.

According to the tax authorities, the sale of foreign companies' securities mainly in real estate in France is liable to a 5% transfer tax based on the sale price, which must be paid by the purchaser of the securities.
According to a final judgment handed down by the Nice Court of First Instance, this position is against the law (Nice Court of First Instance, 27 September 2007, no. 380). The Court confirmed the claimant's argument, whereby, in accordance with territoriality rules, the sale of these securities must be exempt in France in the absence of a legal instrument entered into in France.

This decision in principle provides a case precedent for purchasers of foreign companies' securities mainly in real estate, whether they are companies, banks or individuals, which may be raised against the tax authorities in the event of a tax audit. Although the tax authorities have not yet reconsidered their doctrine, taxpayers now have solid grounds to enable them not to pay the 5% transfer tax in the event of purchase of such securities.
The claimant company was represented by lawyers from CMS Bureau Francis Lefebvre's International Taxation Department.

For further information, please contact: 
CMS Bureau Francis Lefebvre 
Florence Jouffroy / Tel: +33 1 47 38 40 32 
Laetitia Mostowski / Tel: +33 1 47 38 40 74 
Pierre-Jean Douvier, partner / Tel: +33 1 47 38 56 76
Claire Dergatcheff / Tel: +33 1 47 38 55 36