These rules are to be specified by the Council of State and the tax administration

Savings tool widespread and frequently used by managers at LBO, the PEA is subject to strict rules of operation. Their non-compliance leads to closing of the plan and, in principle, the imposition of all earnings contained therein, including the unrealised gains which can sometimes be significant. These rules are to be specified by the Council of State and the tax administration.

The first precision relates to the closing of the PEA in case of transfer of the tax domicile abroad. While the administration accepts that any tax applies in the case of expatriation before the fifth anniversary of the plan, it considered so far that the expatriation, more than five years after the opening of the PEA, resulted in social security payments due to the maximum rate of 11. On a judgment of June 2, 2006, the Council of State ruled illegal the position of the tax administration, on the basis of the Community principle of freedom of establishment. It was indeed found that in the event of transfer of tax domicile in the European Union, social security payments are not due, even if the plan closing after five years.

This decision will facilitate the expatriation of PEA holders, especially when significant gains. It is part of the continuity of another decision of 10 November 2004 relating to the "exit tax". The Council of State was on this occasion held inapplicable in the case of expatriation in the EU, the device was to impose the unrealised gains on substantial shareholdings in the departure of France. Although this device has been found inapplicable only for expatriation in the EU, Parliament repealed it for any transfer of residence from France, regardless of the State of destination, and standardizing the system of taxation applicable to unrealised gains for expatriation. Given the complexity and inconsistency of the tax system of the PEA in expatriation following the decision of June 2, 2006, a uniformity desirable in this area.

Furthermore, a tax statement of 4 August 2006 usefully said several points, annotated, relating to the operation of the EAP so far. The most important details are related to the tax system of the early withdrawal of funds from the PEA for the creation or resumption of a business, to eligibility for EAP of European shares in UCITS, as well as the possibility of posting of unrealized losses at the close of a PEA on future gains.

Clauses "earn-out."

The statement said the articulation of the rules of operation of the PEA with some terms commonly used in assignments of companies, namely indexing clauses, or "earn-out" clauses, and clauses of the guarantee of liabilities. Thus, it is stated that the implementation of such clauses does not the closing of the PEA, subject to certain conditions relating to the use of the species account of the plan.

In addition, the statement said eligibility conditions PEA of the purchase or subscription rights, they are autonomous, such as purchase of subscription of shares, or attached to securities, such as shares or bonds with a good stock (bonds). The administration confirms that the bonds can be included on a PEA because the duty, title-good support, cannot itself be included. In contrast, a detached BSA of a corporate can be included, and the action purchased in exercise of the right, on the condition that the acquisition of it and its exercise are funded through the species account of the PEA.

Finally, the tax administration confirms its position, informal so far, that warrants for shares of entrepreneurs (BSPCE), tool of fairly widespread employee share ownership because its tax regime more favourable than that of stock options and free shares, are not eligible for EAP. It would be, according to the tax authorities, of the shares issued in the exercise. This exclusion is however not expressly provided by law, it is legitimate to question its validity.

All of these details should allow holders of PEA of the limits of use of this tool of savings, especially when it is used by managers of LBO to accommodate their investment in the operation of their group resumed.