Taxation

The following information concerns shareholders who are tax residents of France. This information is not applicable to other countries, each of which has its own tax rules.

Being qualified as a French tax resident requires more than just an address in France. You are generally considered to be a French tax resident if you fulfill one of the following four conditions:

• You have your household in France.
• France is your primary place of residence (more than 183 days a year).
• You work in France.
• You have most of your assets in France.

These conditions should be interpreted in the light of internationalagreements governing double taxation.

If your shares are directly registered, in March of each year, we will send you the imprimé fiscal unique (IFU) reportable tax form, which shows your dividend income and any proceeds from share sales during the prior year.
Compagnie Générale des Etablissements Michelin is subject to the same rules of disclosure to French tax authorities as banks and brokers.

DIVIDEND TAX IN FRANCE

Shareholders who are French tax residents may choose to pay their dividend tax in one of two ways:

Stock dividends are subject to income tax as saving and investment income.

• 40% ALLOWANCE
  In calculating your tax liability, a 40% allowance (abattement) is first applied to any dividend income received from companies headquartered in the European Union or in a country having signed a tax treaty with France to avoid double taxation. The amount of this reduction is uncapped.
• ADDITIONAL ANNUAL ALLOWANCE
  After applying the 40% allowance, dividend income may be reduced by an additional allowance of e1,525 per year for a single, widowed or divorced person or for a married couple who have elected to be taxed separately or e3,050 for a married couple or civil partners who have elected to file a joint tax return.

Opting to pay the 19% flat-rate means forfeiting the standard abattement deductions, even on any dividends that you elect to report as taxable income. Should you choose this option, which is all-or-nothing and irrevocable, please notify us before the dividend payment date.

Regardless of how you decide to pay your dividend tax, your gross dividend income, before abattements, is subject to prélèvements sociaux withholding taxes, which total an aggregate 12.3% as of 2011. These taxes include the CSG (8.2%), the CRDS (0.5%) and the social security financing tax (3.6%; i.e. the original 2.5% plus a 1.1% surtax to finance the RSA guaranteed minimum income system).

These social surtaxes are withheld at source if the paying agent is based in France.

CAPITAL GAINS TAX IN FRANCE

The net capital gain is the difference between the selling price (excluding transaction fees and taxes) of a share and its purchase cost (including purchase fees).

Effective January 1, 2011, all capital gains on the sale of securities in France are subject to income tax and prélèvements sociaux withholding tax, regardless of the amount of proceeds.
Transitional measures are in place to allow shareholders to claim capital losses suffered in 2010 if their total proceeds did not exceed the previous exclusion.

The tax rate has been raised to 19% from 18% and the aggregate prélèvements sociaux rate has been increased to 12.3%, for a total capital gains tax of 31.3%.

CALCULATING YOUR SHARE VALUE FOR THE FRENCH ISF WEALTH TAX

If you are subject to the French wealth tax (ISF), your listed securities should be valued at the last known market price or the average price over the 30 trading days preceding January 1 of each year.

In 2010, the figures for the Michelin share
Closing price: €53.70
Average price: €54.368

THE SPECIFIC CASE OF PEA EQUITY SAVINGS PLANS

Compagnie Générale des Établissements Michelin is not authorized to manage PEA accounts.