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Clifford Chance

Clifford Chance


French Thin-Capitalization Rules

10 March 2011

Article 113 of the French Finance Act for 2006 (law n° 2005-1719 dated 30 December 2005) has introduced French thin-capitalization rules, codified under Article 212 of the French Tax Code ("FTC"). These rules have given rise to comprehensive comments by the French tax authorities in a circular referenced 4 H-8-07 published in the Official Tax Bulletin n° 133 dated 31 December 2007 (the "Circular").

Article 12 of the Finance Act for 2011 (law n° 2010-1657 dated 29 December 2010) introduced new provisions extending the scope of the French thin-capitalization rules to certain loans granted by third-party lenders and guaranteed by a related undertaking.

The purpose of this Briefing is to highlight the key points about the French thin-capitalization rules. It is only a summary of these rules.

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