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Thin Capitalisation in France

Once a tax haven for interest expenses France has recently experienced a significant tax audit activity in this area. Frédéric Laureau Partner at EY Law in Paris outlines what could become the new legislation
A major reform of the French thin capitalisation rules was discussed last autumn but eventually nothing came out either in the Finance Act for 2005 or in the adjusting Finance Act for 2004 both voted through on 22 December 2004 because those discussions did not come to an end. There is however little doubt that this topic will come back in the near future as recent court cases deprived the existing regulations of most of their useful effect.
Current rules can be found in section 212 of the French tax code...

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