Meetings Minutes (with Benoit Laureau) - Friday, 14th 2010

I. Some small preliminary informations.
France, taxes exemption goes until 150 000 euros. Belgium : Project to extent to video games the Taxe Shelter (sort of taxes exemption helping development and investment for audiovisual company). Notionnal Interest [Intérêt notionnel] : fiscal deduction of 4,281 % for small and medium enterprise based on stockholder equity [fonds propres] of the society. It looks a little complicated, but, broadly, it seems to be a fiscal deduction on benefits taxes (http://www.web-libre.org/&lt;wbr&gt;&lt;/wbr&gt;dossiers/interets-notionnels,&lt;wbr&gt;&lt;/wbr&gt;7074.html). It is possible to have an employee in a foreign country without creating a subsidiary. You just have to create a "Permanent establishment" ["établissement stable"]. In this case, the employee will be under the labour law of the foreign country, but taxes on society will be paid in France. WARNING : depending on fiscal international convention, it can lead to a double taxation (the society is taxed in both country).

II. Three Scenarii
We have seen three scenarii to try to profit from ISF deduction in France and from the good video games ecosystem in Canada. The third one looks like the only viable one.

To have a French holding that invests in a separate Canadian company.


 * Problem : A holding is a finance company, and they don't benefit from ISF deduction. What is a finance company : a company where more than 50 % of the employee and the premises are dedicated to financial activities.

To create a French company and its Canadian subsidiary at the same time.

To justify the two tax domiciles [résidence fiscale], we have to split the activities and their localisation into development activities and commercial activities. The idea would to have a Manager in France to conduct commercial activities.


 * Problem : For society taxes, it is okay. The only thing that interest the French IRS is that the benefits come back in France and are taxed in France. In way of contrast, to benefit from ISF deduction, not only you have to pay society taxes in France, but you also have to develop the activity in France (to improve employement, etc.) Yet, if we live in Canada, the development is de facto there.

To create two separate companies, one French and one Canadian. The French company will buy services to an external service provider, the Canadian company. Even better, maybe the French company can advance the 300 000$ required to create a company in Canada, in case we won't be able to by-pass it (for the Good of Canada...).


 * Potential Problem : A French company has only one external service provider. The two companies have broadly the same stockholders, and the animators of the service provider are family or close friend of a large part of the stockholders. The French IRS can interprete this as a fiscal evasion attempt from the concerned stockholders, if they profit from the ISF deduction.
 * Solution : The French company should have several external service provider. For instance, the Canadian Studio for the development, a French company for the marketing, etc.