Real estate: What is an FCPR?

An FCPR (or Fonds Commun de Placement a Risques) is a French venture capital entity whose purpose is to invest in, promote and develop other corporations (provided those corporations are not involved in the provision of financial services). This is usually achieved through the venture capital company taking a participating shareholding in the target company. The law is set out in article 34 of the General Tax Code. The French FCPR legislation was first passed in 1983 at a time when the venture capital industry in France was in its infancy. Since then, given the considerable changes in the French venture capital environment, the legislation has been significantly modified to encourage private equity financing. The FCPR can now be used as a master feeder fund, can be a fund divided into different series, and can also be a fund of funds. Recent regulations now confirm an FCPR to be an easy and tax efficient structure. Not only is the FCPR itself not subject to any taxation in France, but also, French investors pay tax when the gains are distributed and not when the FCPR realizes capital gains.