Clarification of the administrative doctrine on the temporary system of neutralisation of free revaluations of assets introduced by the Finance Act for 2021


The tax authorities have published their first comments on the temporary system of neutralisation of free revaluations of assets on taxable income recently introduced by the Finance Act for 2021 (BOI-BIC-PVMV-40-10-60-30 of 9 June 2021).

Codified in Article 238 JB of the CGI, this optional regime is intended to facilitate the financing capacity of companies in the context of the economic crisis linked to the Covid 19 pandemic. 

The scheme provides for a temporary tax neutralisation mechanism for free revaluations of company assets recorded for the first time at the end of a financial year ending on or after 31 December 2020 until 31 December 2022.

Clearly, the company is authorised, under election, not to take into account the revaluation difference that it recognises for the determination of the taxable result for the financial year during which it carries out the revaluation provided that it undertakes :

– To calculate the capital gain or loss realised on the subsequent disposal of non-depreciable fixed assets according to their non-revalued value;

– To reintegrate the revaluation difference relating to depreciable fixed assets into its taxable profits, in equal parts over a period of fifteen or five years depending on the nature of the fixed asset.

Among the clarifications provided by the administrative doctrine, the following four elements in particular should be highlighted:

(i) the system is applicable to companies subject to commercial accounting rules, but excluding those taxed in the non-commercial profits category (BOI mentioned above, no. 20);

(ii) the non-revalued value to be retained for the calculation of the capital gain or loss on the subsequent disposal of non-depreciable fixed assets is the tax value of the revalued asset (above-mentioned BOI, No. 60);

(iii) the long-term capital gains regime applies to revalued equity securities, including the fraction corresponding to the revaluation difference whose taxation has been deferred (BOI, no. 70);

(iv) in the case of special depreciation allowances recorded prior to the revaluation, the administration specifies that the revaluation does not result in the immediate reversal of these special depreciation allowances (BOI mentioned above n°140). In other words, the revaluation of fixed assets that have given rise to special depreciation allowances does not result in taxation.

The administration provides a model of the follow-up statement to be attached to the tax result of the revaluation exercise and the following exercises (BOI-FORM-000090).

By Ferielle Habili of the Tax Law Department


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