The administrative supreme Court rules about a so called “convention de portage” and the impacts it could have on a share transfer tax control and on the qualification of an “occult distribution”.
What is a “convention de portage”? It is the agreement by which a natural or legal person agrees with another person that he will subscribe or buy shares on behalf of the latter, under certain conditions. It usually includes a condition that the first person will repurchases these shares at the end of a period determined and at a price agreed in advance.
The Administrative Court of Appeal, to which the case is referred, will have to analyze the porting operation in question and determine to what extent this porting was likely to influence the characterization of the liberal intention (equal to Gift) of the two parties to share transfer.
The “Conseil d'État” confirmed that in the event of sale of shares at a minor price by a company, the judge must consider the existence of such “nominee agreement” to characterize the liberal intention, which conditions the qualification of occult distribution. The tax penalty in case of occult distribution being from 75 to 100% of the sums distributed.
