Taxation of shares abroad

The attention of shareholders is drawn to the fact that this presentation is a summary of the currently applicable tax system. It is given as general information and is not intended to constitute a complete analysis of all the tax consequences that could apply to a shareholder; it is therefore recommended that shareholders consult their usual tax advisor in order to study their specific situation.

The following provisions present the main tax consequences applicable to individual or legal entities that hold securities in their private assets and do not carry out stock market operations on a regular basis.

“Taxation of shares abroad” refers to “Individual shareholders who are not tax residents in France”.

Dividends

Dividends distributed by the Company to individuals who are not tax residents in France are in principle subject to a withholding tax of 25%.

However, this withholding is often reduced under international tax treaties. It is the responsibility of the shareholders concerned to contact their tax advisors to determine whether such treaty provisions may apply to their particular situation and determine the practical application of these conventions.

Focus on individual shareholders resident in Belgium:

Capital gains

Capital gains realised by persons who are not tax resident in France within the meaning of article 4 B of the Tax Code, are in principle not subject to tax in France.

French solidarity tax on wealth

Individuals not having their tax residence in France within the meaning of article 4 B of the Tax Code are subject to the solidarity tax on wealth (ISF) as a result of their property in France. However, financial investments are specifically exempt.

Tax consequences of Contribution-Distribution operations

It is specified that the allocation of Company shares or, where applicable, of allotment rights to fractional Company shares, to SUEZ shareholders whose tax residence is not in France is not subject to any withholding tax in France.

Focus on individual shareholders resident in Belgium:

By its decision no. 00.538 of 27 May 2008, the Advance Tax Ruling Service (“SDA”) of the Belgian federal public service for finance has indicated, for the application of the 1992 Income Tax Code (CIR – Code des impôts sur le revenus), the following:

  • the obtaining of Company shares by Belgian SUEZ shareholders will be regarded as a reimbursement, by SUEZ, of share premiums considered as released capital and will not be fiscally qualified as a dividend; this distribution shall not, as a consequence, come under the withholding tax on income from movable assets;
  • the share premiums considered as SUEZ released capital will supposedly be decreased, from the point of view of Belgian tax, down to the market value of distributed Company shares.

As a result of this decision, the free allocation of Company shares by SUEZ to its shareholders whose tax residence is in Belgium must be considered as a reimbursement by SUEZ of share premiums considered as released capital, up to the limit of the market value of the Company share, as valued on the day of Distribution (this market value being fixed, on the basis of its first opening listing price).

This process will also be applicable to allotment rights to fractional Company shares, it being specified that each allotment right will be valued at a quarter of the Company share’s market price as defined above. The SDA indicated, in essence, that if the Belgian accounting process implies processing the operation as a neutral reorganisation from an accounting point of view, the difference that may surface between the accounts value and tax value of SUEZ shares and Company shares will not make either taxable profits or tax-deductible charges possible and is therefore be neutral from a tax point of view. The capital gains and losses realised by these shareholders at the time of subsequent disposal of shares will, for the application of tax provisions, be calculated on the basis of the tax value of the shares, on completion of the distribution.

Tax system of allotment rights

Capital gains realised as a result of disposals of allotment rights to Company shares by persons who are not tax resident in France within the meaning of article 4 B of the Tax Code, are in principle not subject to tax in France.