A company spin-off or division is defined by Art. 210-0A of the CGI as the operation by which the divided company transfers - at and after its dissolution without liquidation – its entire set of assets and liabilities to one or more preexisting companies or to new ones – by issuing new shares to the associates of the spin-off, proportionally to their rights to capital, the companies’ securities, and eventually a cash payment of no more than 10% of the securities’ nominal value.
Concerning registration fees, Art. 301D of Annex II to the GCI does not require a proportionate repartition of securities.
With respect to corporate income tax, in order for the spin-off to benefit from the favorable regime applicable to mergers, the following conditions must be met:
- the divided must have at least two branches of activities;
- the receiving companies must each receive one or more of these branches of activities;
- the shareholders must commit to keep the shares received in the receiving. This commitment is imposed to shareholders holding at least 5% of voting rights of the company being divided at the date of approval of the operation; and to those the same time holding at least 0.1% of these voting rights and that hold administration, management or supervisory functions. The voting rights held must altogether represent at least 20% of the capital of the divided company.
When one or the other of these conditions is not satisfied, the favorable regime may still apply but subject to prior approval by the Revenue.
The favorable tax regime on registration fees and distribution tax apply with no particular prerequisite.