Tax credit for the buyout of a company by its employees

Article 38 of the Act of 30 December 2006 creates a corporate income tax credit (Article 220 nonies of the General Tax Code) for companies set up solely to buy all or part of a company on behalf of its employees. Each year the credit equals the corporate income tax paid by the acquired company in the previous financial year, in proportion to the rights indirectly held by the employees, capped at the interest on the loans taken out for the buyout. Voting rights in the holding company must be held by at least fifteen employees of the acquired company, or 30% of employees where the workforce is fifty or fewer, and the operation must be covered by a company agreement. The article also exempts the purchase of shares from registration duties and registers contributions free of charge. Reporting obligations were set by Decree No. 2007-1505 of 19 October 2007.