France has a legal framework covering securitization since 1988. Law No. 88-121 is the main legislation providing for the establishment of special purpose vehicles (SPVs), the issuance of securities and receivables in France. The main reason this law was enabled was to allow French financial companies to sell mortgage-secured receivables.
Ever since, the law was amended and thus improved several times since 1988. Our company formation consultants in France can offer complete information on the legal regime applicable to SPVs nowadays.
The French SPV follows the general accepted principles of special purpose vehicles around Europe and that is a subsidiary established in order to reduce bankruptcy risks of the shareholder who can only be a foreign company. In 2008, the government enabled two forms for a French SPV:
While the SDT is a corporation considering its registration form, the SPV established under the form of a FCT is a co-ownership with no legal personality. The FCT is a collective investment scheme which can be set up by a fund manager and custodian. The FCT will have no shareholders, capital, employees or management board. On the other hand, the SDT will be opened through registration with the French Companies Registrar. Both types of French SPVs must be registered with the Financial Markets Authority.
One of the most important advantages of French SPVs is their taxation. The FCT is not subject to any transfer or documentary taxes, or to the stamp duty if it is not registered with the local tax authorities. If it is, it will be subject to a nominal tax. Receivable traded by French SPVs on the capital markets will also be exempt from any withholding taxes, as they are tax neutral.
For complete information on the advantages of setting up special purpose vehicles in France, do not hesitate to contact our company incorporation representatives. You can also rely on our company formation services provided in France.