Long-term capital gains on substantial shareholdings ("Copé loophole"): 0% rate with a share of costs added back

Article 39 of the 2004 Amending Finance Act reforms the taxation of net long-term capital gains made by companies subject to corporate income tax on the sale of shareholdings held for at least two years. The reduced rate, previously 19%, is cut to 8% for financial years starting in 2006 and set at 0% for financial years starting on or after 1 January 2007. In return, a share of costs and charges equal to 5% of the net result of the gains is added back to taxable profit. This regime is commonly known as the "Copé loophole" (niche Copé), after the budget minister of the time, Jean-François Copé; according to the Court of Audit it stems from an amendment by the Senate general rapporteur Philippe Marini. The 0% rate still applies; the add-back share was later raised to 10%, then to 12% of the gross gains.