Lawyer Monthly - February 2023

full reimbursement. However, such steps require a long term renting with services. If the investment were being made across international borders, perfect coordination between the advisors is absolutely necessary. Although we are part of an integrated world, the tax world is still defined by procedures individual to each country. Many tax-efficient regimes do exist in France, but detailed conditions must be met. As an example, given the objectives of a project, the dividend taxation regime tends to be the most favourable, and therefore the SIIC and the SPPICAV should be the most efficient structuring. The SIIC (listed company) requires the fulfillment of the following obligations: - 60% of the share capital should not be held by the same investor or investors who agreed to act in the same way, and; - At least 15% of the share capital should be held by investors holding each not more than 2%. Furthermore, at least seven investors, in addition to the two main shareholders, should hold a part of the SIIC capital. The SIIC is also subject to specific distribution obligations every year: - 85% of the rental income received by the SIIC every year from the SCIs - 50% of the capital gain derived from the sale of real estate by the SCIs - 100% of other incomes (e.g. dividends received from subsidiaries of the SIIC) Failure to comply with the distribution obligation may lead to the loss of the benefit of the CIT exemption regime of the SIIC. In addition, dividends distributed by the SIIC may be subject to withholding tax to its legal investors holding, directly or not, at least 10% of the SIIC in case such investors are not subject to CIT (or, if foreign investors, to an equivalent taxation). Due to these quite restrictive conditions, tax audits often begin due to a mail issue caused by failing to swiftly follow up on a request from the French tax authorities. How would you advise a high-net-worth client or large company on beginning a taxefficient investment in French property? What additional elements would need to be taken into account if the investment were being made across international borders? To be tax-efficient today requires first and foremost to set up a consistent SPV with the purpose of avoiding any discussion about artificial settlements. For instance, in case of significant renovation and a decision to rent the real estate, it may be in the scope of the paid VAT to obtain a MY LEGAL LIFE 21

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