French Court Issues Ruling Clarifying Participation Exemption Criteria for Dividends Derived from Shares Carrying Voting Rights

The French Administrative Supreme Court issued a ruling on 5 November 2014 that the 5% participation threshold for participation exemption is based primarily on capital participation. Therefore, in the event a company holds 5% or more of the capital of its subsidiary, it is still eligible for the participation exemption on dividends derived from shares that carry voting rights even if the voting rights do not constitute 5% or more of the voting rights of the subsidiary.