FRANCE Law and Practice Contributed by: Rima Maitrehenry, Fabrice Rymarz, Charles-Xavier Vincenti and Stein Mpassi Loufouma, Racine
French OFS set up as corporate entities are also subject to CIT. However, special adjustment rules apply for the computation of their taxable income. Other AIFs Dedicated to Real Estate Investment A few AIFs can be set up as partnerships ( socié- tés de personnes ), such as real estate invest - ment companies (SCPI or Other FIAs set up as SCI). SCPI and SCI are pass-through entities not subject to CIT per se. The taxable income is computed at their level but automatically taxed in the hands of their investors (even if the income is not effectively distributed) based on the rules applicable to real estate income. Accordingly, the following applies. French individual investors are generally subject to the progressive scale of income tax (increase by a 4% contribution for high-income investors). Social security contributions are also applicable at a 17.2% rate. French corporate investors are subject to CIT under standard conditions. Foreign investors should also be subject to tax in France on real estate income deriving from real estate assets located in France (based on the same rules applicable to French investors, depending on whether they are individual or corporate investors), subject to the provisions of applicable double tax treaties. A French real estate fund can be set up as a fonds commun de placement immobilier – FPI. FPI are outside the scope of CIT, provided that they comply with mandatory income distribu - tions. Investors are taxable on the date of their effective redistribution based on the rules appli -
cable to real estate income (which are described above).
3. Retail Funds 3.1 Fund Formation 3.1.1 Fund Structures See 2.1.1 Fund Structures . 3.1.2 Common Process for Setting Up Investment Funds See 2.1.2 Common Process for Setting Up Investment Funds . 3.1.3 Limited Liability See 2.1.3 Limited Liability . 3.1.4 Disclosure Requirements See 2.1.4 Disclosure Requirements . 3.2 Fund Investment 3.2.1 Types of Investors in Retail Funds See 2.2.1 Types of Investors in Alternative Funds . 3.2.2 Legal Structures Used by Fund Managers See 2.2.2 Legal Structures Used by Fund Man- agers . 3.2.3 Restrictions on Investors See 2.2.3 Restrictions on Investors . 3.3 Regulatory Environment 3.3.1 Regulatory Regime See 2.3.1 Regulatory Regime . 3.3.2 Requirements for Non-Local Service Providers See 2.3.2 Requirements for Non-Local Service Providers .
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