Legrand Legrand

Notice

The following information summarizes certain general provisions of current French tax law applicable to individuals who are tax residents of France. This summary is provided for informational purposes only and is not a substitute for an examination of each personal situation. Shareholders are advised to consult their usual tax advisers for information about the tax and social security treatment of their shares.

Shareholders who are not resident in France for tax purposes should consult their tax advisor.

Since August 1, 2012, a 0.2% tax on financial transactions may be due when shares are acquired.

Taxation of dividends

The dividend distributed in 2017 in respect of the 2016 fiscal year (€1.19 per share, of which €0.791 per share is considered income from securities and €0.399 per share is considered reimbursement of additional paid-in capital) is subject to two separate tax regimes applicable to individuals who are tax residents of France:

  • The €0.791 per share component:
    • This portion of the dividend is considered income from securities, taxable at the individual’s progressive income tax rate but eligible for a 40% allowance for individuals who are tax residents of France, under Article 158-3-2° of the French General Tax Code (Code général des impôts).
    • This portion of the dividend is also generally subject to a mandatory 21% withholding tax on the gross amount of dividends received (excluding the 15.5% social security contribution). The 21% withholding tax becomes a tax credit to be offset against income tax liability for fiscal year 2017. However Article 117 quater of the French General Tax Code states that individuals living in households whose annual taxable income two years before the relevant year (as defined in Article 1417 IV 1°) was less than €50,000, for single, divorced or widowed taxpayers, or less than €75,000, for couples filing jointly, may request an exemption from this withholding tax. Eligible individuals are responsible for requesting the exemption (subject to satisfying all conditions for the exemption) and for delivering the appropriate documentation to their paying institution before November 30 of the year preceding the year in which the dividend is paid.
    • This portion of the dividend is also subject to a 15.5% social security contribution.
  • The €0.399 per share component:
    • The distribution deducted from the “issue premium” account is considered a reimbursement of paid-in capital within the meaning of Article 112-1° of the French General Tax Code, and as such is not taxable.
    • However, the €0.399 per share distribution would reduce the tax basis of the Company’s shares by the same amount.

Taxation of capital gains

Capital gains realized from sales of shares in 2016 are subject to the following:

  • Income tax at the progressive rate
    Note, however, that an allowance may apply, depending on how long the shares have been held:
    • Under two years: no allowance
    • Between two and eight years: a 50% allowance may apply, which the taxpayer is responsible for requesting
    • More than eight years: a 65% allowance may apply, which the taxpayer is responsible for requesting
  • Social security contribution at the rate of 15.5%, due on all capital gains realized on sales, before application of the allowance, and collected directly by the French tax authorities.

Capital losses from sales may be used to offset capital gains of the same type realized in the same year or within the next ten years.

It should be noted that following a decision of the French Conseil d’Etat dated November 12, 2015, the allowance based on duration of ownership no long applies to capital losses on sales. The allowance for duration of ownership applies to net gains from sales of shares, after deduction of capital losses.

Wealth Tax

The value of the taxpayer’s stock portfolio is included when calculating the value of assets on which the French wealth tax (impôt de solidarité sur la fortune, or ISF) will be based. Listed securities are valued at their most recent known price or based on the average of the last thirty closing prices preceding the taxation date.

For 2016 tax returns:

  • The closing price on 12/30/2016 is €53.95
  • The average of the last thirty closing prices in 2016 is €52.89.
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