Legal news

Introduced by the law of August 1, 2003, the status of financial investment advisor (FIA) aims to strengthen investor protection through better supervision of this player in the marketing of financial products. All FIAs are subject to a certain number of obligations and prohibitions, controlled by the AMF.

Conditions of access and exercise of the CIF

Broadly speaking, in addition to the obligation to join an association of FIAs approved by the AMF, all intermediaries must meet the following conditions:

• The condition of habitual residence in France;
• Condition of age and good character;
• Condition of professional capacity;
• Condition of professional liability insurance.

The condition of habitual residence in France:

The status of FIA requires individuals and legal entities to be ordinarily resident in France, pursuant to the last paragraph of Article L. 541-2 of the Monetary and Financial Code.

Age and Good Character Requirements:

In order to practice, the FIA, whether an individual or a person with the power to manage or administer an authorized legal entity, must meet the following conditions (Articles L. 541-2 and D.541-8 CMF):

• a condition of age: to have the legal majority;
• the conditions of good repute in accordance with article L. 541-7: not to be subject to the incapacities of article L.500-1 CMF (like the IOBSPs) and/or not to have been the subject of a sanction pronounced by the AMF of prohibition of practice either temporarily or definitively.

Professional capacity requirement:

The conditions of professional competence required to benefit from this status are set out in the new version of Article 325-1 of the AMF General Regulation. Therefore, in order to practice, the FIA must justify :

• or a national diploma attesting to three years of higher education in law, economics or management, or a title or diploma of the same level, suitable for carrying out the operations mentioned in I of article L. 541-1 of the monetary and financial code;
• or a professional training of at least 150 hours, acquired with an investment services provider, an association of financial investment advisors or a training organization, adapted:

– to the realization of operations on the financial instruments (art, L. 211-1 of the cmf);
– the provision of investment services, (article L. 321-1 of the cmf);
– to the realization of operations on various goods (‘article L. 550-1 of the cmf).

• or two years’ professional experience, acquired during the five years preceding his or her entry into service, in functions related to the performance of the operations described above. The professional experience must have been acquired with an investment services provider, a financial investment advisor, a tied agent of an investment services provider or an insurance intermediary.
  With regard to the above-mentioned diploma, AMF Instruction n°2013-07 published on April 24, 2013, provides that it be registered in the National Directory of Professional Certifications, in one of the following nomenclatures of training specialties:

– 122 (Economics),
– 128 (Law and Political Science),
– 313 (Finance, banking, insurance and real estate),
– 314 (Accounting, Management).

Degrees or diplomas of the same level include foreign degrees recognized by the ENIC-NARIC Center8 on the basis of a certificate of comparability.

Within the framework of the provisions relating to the obligation of updating the knowledge of the members at the charge of the professional associations, the eligible training for the professional capacity of the CIF includes the topics fixed by the instruction such as:

– general knowledge of financial investment advice;
– general knowledge of how to market financial instruments;
– rules of good conduct for ICFs;
– the rules of organization of the CIF.

Pursuant to Article L.541-2 of the CMF, the conditions of professional capacity and good repute apply to “FIAs who are natural persons, as well as natural persons with the power to manage or administer a company carrying on the activity of financial investment advisor”.

D) Professional liability insurance requirement:

Financial investment advisors must, in order to practice, have professional liability insurance covering the pecuniary consequences of their activity, in accordance with article L. 541-3. The threshold of this guarantee differs depending on whether the advisor is a natural person or a legal entity with at least two employees:

• For natural persons and legal entities with less than two employees: 150,000 euros per claim and 150,000 euros per insurance year;
• For legal entities with at least two employees: 300,000 euros per claim and 600,000 euros per insurance year.

These guarantees take effect on March 1st for a period of twelve months, the contract is tacitly renewed on January 1st of each year.

In accordance with Article D.541-9 (paragraph 2), FIAs exercising an advisory activity, dealing exclusively with services related to the investment services of Article L.321-2 CMF, are not subject to the amounts mentioned above.

ORIAS does not have the competence to control the number of employees within legal entities, within the framework of the differences in minimum coverage thresholds, and is not, at this stage, in a position to give an opinion on the application of the last paragraph of D. 541-9.

This is the reason why the minimum thresholds of control of the coverage of the professional civil liability of the FIAs will be 150.000 euros per claim and 150.000 euros per insurance year.

Special provisions

As a derogation from the Markets in Financial Instruments Directive (MiFID), the latter cannot be exported thanks to the European passport, which has been applicable to insurance intermediaries since the DIA, nor within the European Union and the European Economic Area, under the terms of Article L. 541-8 of the Monetary and Financial Code.

The Autorité des Marchés Financiers, in its position-recommendation n°2006-23 as amended, answers in paragraph 3.2 to the question relating to the FIA legal entity managed or administered by a legal entity.

“The first paragraph of Article L. 541-2 of the Monetary and Financial Code, relating to the conditions of access to the status of FIA in terms of age, good repute and professional competence, refers only to “financial investment advisors who are natural persons” and “natural persons with the power to manage or administer legal persons authorized as financial investment advisors”.

It follows from this provision that only natural persons may manage or administer a legal person FIA and appear in this capacity in the register of intermediaries kept by ORIAS, according to Article 1 of the Order of March 1, 2012 on the single register.”

Therefore, by way of example, CIF legal entities whose legal form is a simplified joint stock company (SAS) with a separate legal entity as President are not admitted.

AMF Position-Recommendation N° 2006-23, as amended, introduces a new rule of non-cumulation of categories for FIAs and ALPSIs, in paragraph 2.1 b).

“Given the differences in regime, the distinct scope of activities that each of these two statuses allows, and the obligation for the FIA to behave loyally and act fairly in the best interests of his clients (Article L. 541-8-1 of the Monetary and Financial Code), an FIA must not combine his status with that of tied agent.

Tax optimization in Nice is a common and widely mastered operation by Brahin. Whether it concerns an individual or a legal entity, the objective is the same, namely to save and manage one’s assets and finances… while remaining within the law. Discover all you need to know about tax optimization in Nice and on the French Riviera.

Tax optimization in Nice: what does it mean?

Under this term which can sometimes frighten or create misunderstanding, the logic is however rather simple… While being based on a real complexity in France. Indeed, France has a very complex administrative and fiscal system. There are many rules, clauses and conditions, which only the informed can handle with dexterity. The objective for a Côte d’Azur resident to set up a tax optimization in Nice with the Brahin firm is simply to save money. More precisely, the idea is to pay less taxes ! For this, several solutions are possible depending on the profile of each person.

How does it work?

Depending on the case, Brahin can advise you to declare your assets and income differently. You may be led to invest in structures or in real estate for example, in order to benefit from tax niches. Brahin’s objective will always be to offer you the best solutions, but you will of course remain in control of your choices.

Tax optimization in Nice: is it legal?

The question of the legality of tax optimization in Nice comes up repeatedly and the answer is simple and clear: YES ! That’s why you should trust a tax lawyer in Nice like Nicolas Brahin. Your investment actions and declarations remain perfectly within the bounds of legality… While offering you the opportunity to reduce your tax costs, your taxation.

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Despite what we may think, it is not only the richest people in the world who practice tax optimization. In fact, tax optimization in Nice is widespread among workers who have a small fortune… or a salary that starts to generate a consequent tax burden. The heads of small and medium-sized companies are also concerned. Thus, tax optimization makes sense, as soon as you pay taxes… And the larger the amount, the more interesting it is to look into a financial arrangement.

Nicolas Brahin expert in tax optimization in Nice

Lawyer at the bar of Nice for many years, Nicolas Brahin has assisted hundreds of people in their tax optimization efforts. This confidence is due in particular to the concrete results obtained and the savings made.
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The real estate credit contract is above all a contract for the loan of money; as such, the contracting parties are bound to respect the obligations arising from this contract in accordance with the provisions of the ordinary law of contracts (C. civ., art. 1134)1 and of loans of money (C. civ., art. 1905)2 . In the real estate credit contract, as in other contracts, it is the meeting of the minds that gives rise to the obligations of both parties.

This meeting of the wills supposes :

• an offer and
• an acceptance

That articles L. 312-7 to L. 312-14 of the Consumer Code subject to conditions of validity, so that the contract can be validly formed. Since a real estate loan contract is not in the nature of a real contract (Cass. 1re civ., 27 May 1998: Bull. civ. 1998, I, n° 186; D. 1999, jurispr. p. 194, note Bruschi; D. affaires 1998, jurispr. p. 1121, obs. S. P.; LPA 16 July 1999, p. 23, note by Depadt-Sebag), it follows that the contract will be formed by the acceptance given by the addressee of the offer II – The credit offer: The principle is set out in article L. 312-7 of the Consumer Code, which states: “For the loans mentioned in Article L. 312-2 3 , the lender is required to make a written offer sent free of charge by mail to the potential borrower and to the guarantors declared by the borrower when they are natural persons.

Summary:

I – PRINCIPLE:

II – THE CREDIT OFFER :

III – ACCEPTANCE :

file to download:
120113 – Conditions of validity of the offers of real loans

Applicable texts

Article L161-1 of the Rural Code

Rural roads are the roads belonging to the communes, assigned to public use, which have not been classified as communal roads. They are part of the private domain of the commune.

Article L161-2

The use of a rural road for public purposes is presumed, in particular by the use of the road as a passageway or by repeated acts of surveillance or roadwork by the municipal authority.

The destination of the road may be defined in particular by its registration on the departmental plan of walking and hiking routes.

Article L161-3

Any path assigned to public use is presumed, until proven otherwise, to belong to the municipality on whose territory it is located.

Article L161-4

Disputes which may be raised by any interested party concerning the ownership or the total or partial possession of rural roads are judged by the courts of law.

Article L161 – 5

The municipal authority is responsible for the police and the conservation of rural roads.

Article L161 – 6

The following may be incorporated into the rural road system, by deliberation of the municipal council taken on the proposal of the board of the landowners’ association or of the general assembly of the syndicate association

a) The roads created in application of articles L. 123 – 8 and L. 123 – 9 ;

b) The exploitation roads opened by authorized syndicate associations, under c of article 1 of the aforementioned ordinance of July 1, 2004.

Article L161 – 7

When, prior to its incorporation into the rural road system, a road has been created or maintained by a landed association, an authorized syndicate association, created under c of article 1 of the aforementioned ordinance of 1 July 2004, or when the road is created in application of article L.

121 – 17, the work and maintenance are financed by means of a tax distributed in proportion to the interest of each property in the work. The same applies to a rural road whose opening, straightening, widening, repair or maintenance was the responsibility of a syndicate association before January 1, 1959.

In other cases, the municipal council may institute the tax provided for in the preceding paragraphs, if the road is used for the operation of one or more properties. The provisions of article L. 2331 – 11 of the general code of local authorities, hereinafter reproduced, are applicable to this tax

general code of local authorities, hereafter reproduced, are applicable to this tax:

“Art.L. 2331 – 11: The particular taxes due by the inhabitants or owners by virtue of the local laws and customs are distributed by deliberation of the municipal council.

“These taxes are collected as for direct taxes.

Article L161-8

Special contributions may, under the conditions provided for communal roads by article L. 141-9 of the highway code, be imposed by the municipality or the syndicated association mentioned in article L. 161-11 on owners or contractors responsible for damage to rural roads.

Article L161-9

The provisions of article L. 141-6 of the highway code are applicable to deliberations of municipal councils concerning the widening of rural roads not exceeding two meters or their straightening.

Article L161-10 When a rural road ceases to be used by the public, the sale may be decided upon after an inquiry by the municipal council, unless the interested parties, grouped in a syndicate association in accordance with article L. 161-11, have asked to be responsible for maintenance within two months of the opening of the inquiry.

When the alienation is ordered, the riparian owners are given notice to acquire the land adjoining their properties. If, within a period of one month from the date of the warning, the riparian owners have not submitted their bids or if their bids are insufficient, the land is alienated according to the rules followed for the sale of communal properties.

Article L161-10-1

When a rural road belongs to several communes, a decision on the sale is taken after a single survey by concordant deliberations of the municipal councils. It is the same when roads belonging to several communes constitute the same itinerary between two intersections of ways or paths. The modalities of application of the survey prior to the alienation are fixed by decree.

Article L161-11

When works are necessary or when a rural road is not maintained by the municipality and either half plus one of the interested parties representing at least two thirds of the surface area of the properties served by the road, or two thirds of the interested parties representing more than half of the surface area propose to take charge of the works necessary to put or maintain the road in a viable state or request the institution or the increase of the tax provided for in article L. 161-7, the municipal council must deliberate within a period of one month on this proposal. If the municipal council does not accept the proposal or if it does not deliberate within the prescribed time limit, an authorized syndicate association may be constituted under the conditions provided for in article 1 c and title III of the aforementioned ordinance of 1 July 2004.

The road handed over to the syndicate remains however open to the public unless otherwise decided by the municipal council and the general assembly of the syndicate.

Article L161-12 The technical characteristics which rural roads must meet, the conditions under which rural roads may be modified to adapt to the agrarian structure, the conditions under which voluntary subscriptions for these roads are accepted and carried out, and the methods of application of article L. 161-7 are fixed by regulation.

Article L161-13 The following provisions of the highway code are applicable to rural roads

1° Article L. 113-1 relating to road signs ;

2° Articles L. 115-1, L. 141-10 and L. 141-11 relating to the coordination of work carried out on public roads

file to download:
120621 – Note on the Rural Road

Review of the enforceability of a foreign decision

The Regulation determines the jurisdiction, recognition and enforcement of judgments in civil and commercial matters within the Member States of the European Union (EU).
The Regulation determines the jurisdiction of courts in civil and commercial matters. It provides that judgments given in one European Union (EU) Member State shall be recognized in the other Member States without the need for any procedure except in cases of dispute. A declaration of enforceability of a judgment must be issued after a simple formal check of the documents provided, without the court being able to raise ex officio any of the grounds for non-enforcement provided for in the Regulation.

The Regulation does not cover fiscal, customs or administrative matters or the following matters

• status and capacity of natural persons, matrimonial regimes, wills, successions
• bankruptcies;
• social security;
• arbitration.

Summary:

I – COUNCIL REGULATION (EC) NO 44/2001 OF 22 DECEMBER 2000 ON JURISDICTION AND THE RECOGNITION AND ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS

II – THE DECISION OF APRIL 12, 2012 OF THE FIRST CIVIL CHAMBER OF THE COURT OF CASSATION

III – DIFFICULTIES IN THE ENFORCEMENT OF FOREIGN DECISIONS CONCERNING COLLECTIVE PROCEEDINGS

file to download:
120703 – Review of the enforceability of a foreign decision

C A B I N E T     B R A H I N

DANSK-FRANSK ADVOKATFIRMA I FRANKRIG   /   DANISH-FRENCH LAW FIRM IN FRANCE

The real estate capital gain

I. Overview of the calculation of the real estate capital gain

With the real estate boom, any property sold has a good chance of generating a profit on its purchase price.

The realized capital gain is the difference between the acquisition price and the resale price, minus an allowance of €1,000 applied as a lump sum.

1) Purchase price
2) Selling price
3) Calculation
3-1) During the first 5 years
3-2) After 5 years
3-3) After 12 years.

1) Purchase price: the purchase price is the actual price plus the notary fees and the agency fees left to the buyer. Important works will be taken into account on invoice, provided that they have improved the comfort of the acquired property: various installations, enlargement, elevator, creation of bathroom, various installations. Work that has already generated a reduction in income tax (insulation work) cannot be taken into account a second time. For the same reasons, if the cost of the renovation work has been deducted from your property income, it is not possible to deduct the capital gains tax.

2)  The selling price must be included by the deducted selling expenses. These are agency fees payable by the seller, the ? diagnosis made compulsory by the SRU law (asbestos, termites, lead law Carrez) or the costs of releasing the mortgage attached to the building.

3) Calculation:

The capital gain generated makes it easy to calculate the amount of tax that will be due:

Taking for example a property bought 100.000 € and resold 150.000 €, that is to say a difference of 50.000 € representing the capital gain.

3-1) During the first 5 years
3-2) After 5 years
3-3) After 12 years
3-1) During the first 5 years :
To calculate the tax, it is sufficient to apply to this difference a multiplier of 27%, i.e. 55.000 € – 1.000 € (fixed allowance) x 27% = 13.230 €.

3-2) Beyond 5 years: an annual allowance of 10% will reduce the tax proportionally to the number of years elapsed. Thus 8 years of ownership will generate in our example a capital gain of 50.000 € taxed as follows 50,000 € – 30% equals an allowance of 15,000 € for a gross result of 35,000 € – 1,000 € (fixed allowance) that is 34,000 € net taxable at 27%, thus a final tax of 9,180 € (CSG and CRDS and social deductions included).

3-3) After 12 years:

The same capital gain realized after 12 years instead of 8 years would give: 50,000 € x 7 equals 35,000 € (allowance) minus 1,000 € (flat rate) or 14,000 € x 27% equals 3,780 €. We can see that with time, the degressivity of the tax is obvious.

However, the capital gain is tax-exempt in certain cases:

It does not affect any resale beyond 15 years of ownership nor the main houses, whatever the time of ownership. Nor does it concern resales of less than 15,000 € with ? on ? appreciation of the tax services ? extension of this provision to the share of the different owners of property in joint ownership.

The same applies to dismembered properties (usufruct, bare ownership).

In principle, capital gains made after reparcelling are not concerned, nor are expropriations if the funds allocated are reinvested within the following 12 months. Finally, holders of an old-age pension or a disability card are exempt, provided they have sufficient resources and are not subject to wealth tax.

Finally, it should be noted that the notary withholds the amount of the tax from the sale price and pays it directly to the Treasury when the deed is registered.

II. The price level on the French Riviera

The real estate market in France, and particularly in the south of the country, is constantly on the rise. The latest survey by the Chamber of Notaries of the Alpes-Maritimes department (which extends along the coast from Menton to Cannes – La Côte d’Azur), published in mid-October 2006, refers to an average increase based on all transactions recorded from June 1, 2005 to May 30, 2006 of 11% for apartments and 16% for houses and villas. 17% of the buyers are foreigners; Italians account for 8%, and 4% of them are British. (Danes are not mentioned separately).

The price per square meter of an apartment on the Côte d’Azur is currently 42% higher than in other French provinces.

Since 2001, the price of apartments on the Côte d’Azur has increased by 103% in total, while the price of houses and villas has increased by 67%. As for real estate transactions with a price exceeding 700,000.00 Euros, one out of two buyers was foreign.

The report indicates that the Côte d’Azur continues to have a lower price per M2 than other European countries.

The increase is due to the small amount of land available in this department.

Generally speaking, for the period from 2005 to 2006, the Côte d’Azur notaries noted slightly fewer transactions, but at higher prices.

III. Sale of secondary residence within the first 5 years – domiciled in Denmark

For sellers domiciled in Denmark, there is currently a favorable exception: The current interpretation of the Franco-Danish double taxation agreement of 1957 stipulates that sellers of a second home in France who are domiciled in Denmark are invited to pay the tax on their capital gain in Denmark. However, as you may already know, in Denmark there is a rule of non-taxation on the sale of second homes. In this somewhat circuitous way, one can avoid paying capital gains tax. But let’s be clear: this is the situation at the moment! This is shown by a recent judgment concerning a case between France and Luxembourg.

Before proceeding with a sale, however, it is advisable to seek assistance, as councils and notaries, who are not familiar with the special Danish conditions, are quite capable of lumping together a seller domiciled in Denmark with any other European seller. Nor can we expect this rule of law to be maintained permanently.

Me Nicolas BRAHIN
Lawyer at the Bar of NICE
Nicolas.brahin@brahin-avocats.com
Diploma of Higher Specialized Studies in Banking and Financial Law
Panthéon-Sorbonne University (DESS 1997)

file to download:
061024 Price level and real estate appreciation 09.06.06.MIS