Regulatory Changes Pave Way for Islamic Finance in France

The Ministry of Finance has announced on November 26 that new tax regulations will be published before the end of the year allowing the deductibility of the remuneration paid by French companies to sukuk holders and confirming the absence of withholding tax on such remuneration. Such regulations will also deal with the financing of French companies via murabaha transactions. The French legislation relating to the fiducie (a French organization similar to a trust) will also be amended to facilitate such transactions. Our Paris office has recently developed significant expertise in this area, in particular by participating in working groups dedicated to the introduction of Islamic Finance in France. These new regulations will create new opportunities for shariah-compliant investments in France.