• French tax consolidation: definitive losses from a European subsidiary may be offset in France – Judgements of the Montreuil Administrative Court (“TA”) on February 11th, 2021, No.1808706, Société Compagnie Plastic Omnium and No.1804038, Société Générale

Losses suffered by a European subsidiary which is a member of a French consolidated tax group may be offset against the overall taxable income provided that these losses are definitive according to cases law of the European Union Court of Justice.


• Tax losses transfer under ruling: the French Administrative Supreme Court (“CE”) clarifies the concept of significant change in the activity – Decision of the 9th and 10th chambers of the CE on April 2nd, 2021, No.429319, SAS Alliance Négoce

The CE considers that the decrease in staff and operating facilities of the merged company, while it aims to maintain the volume of the activity giving rise to the tax losses, is not sufficient to argue that a significant change in the activity occurred (justifying to refuse a ruling).



• Assistance in tax collection in a Franco-Swiss context: the CE clarifies Section 28 bis and offers new perspectives – Decision of the 3rd and 8th chambers of the CE on January 26th, 2021, No.429381 an No.429410

In these decisions, the CE judges that the Administrative Court of Appeal committed an error of law considering that “it does not result from any Franco-Swiss agreement provision that both countries would have a legal instrument relating to mutual assistance in the collection of income tax and social security contributions on income, whereas the provisions mentioned in Section 28 bis, § 4 of the France and Switzerland tax treaty concluded on September 9th, 1996, which have a scope similar to that of Council Directive 2010/24/EU on March 16th, 2010, were applicable in the case at hand”. These decisions offer interesting perspectives for litigation (notably in matters of Exit tax in a Franco-Swiss context)


• Hierarchical referral: the taxpayer benefits from two distinct guarantees during and after the tax audit – Decision of the 9th and 10th chambers of the CE on March 25th, 2021, No.430593, Société RTE Technologies

The CE judges that the possibility offered to the taxpayer to ask for a meeting with the head of Brigade during the course of a tax audit and before the tax reassessment is sent constitutes a substantial guarantee different from the one offered after the taxpayer comments to the tax reassessment. Failure from the French Tax Authorities (“FTA”) to comply with one of these two guarantees may entail the irregularity of the tax reassessment procedure.


• Tax fraud: a taxpayer whose incomes are paid to his foreign company is deemed to have received them, even if he did not effectively perceive these incomes – Decision of the Criminal chamber of the French Civil Supreme Court on April 8th, 2021, No.19-87.905

Pursuant to Section 155 A of the French Tax Code (“FTC”), the CE judges that it is not necessary that services were provided from France to tax, in the name of the French domiciled taxpayer who provide these services, the corresponding remuneration paid to an entity domiciled or established abroad. The CE adds that the circumstance that the accused did or did not effectively perceive the sums does not entail any consequence regarding the characterization of the tax fraud resulting from the failure to declare those remunerations.



• France and Singapore tax treaty: being temporarily housed in France does not characterize a permanent home – Decision of the 8th chamber of the CE on December 29th, 2020, No.434257

The CE judges that a taxpayer housed in France by his sister during his stays, r where he receives his correspondence, does not have a permanent home in France.


• France and UK tax treaty: the CE clarifies the extent of the judge’s control over the concept of beneficial owner – Decisions of the 9th and 10th chambers of the CE on February 5th, 2021, No.430594 and No.432845, Performing Rights Society Ltd

Pursuant to Section 13,1 of the France-UK tax treaty, the CE denies the beneficiary owner quality to a company that, even if its purpose is to collect and manage incomes paid to its members, pays back most of the sums received, every year, to its members.


• Companies’ interposition: an offshore scheme cannot be deemed fraudulent – Decision of the 9th and 10th chambers of the CE on February 24th, 2021, No.434129, Société France Citévision

The CE judges that Section 119 quarter, 3 of the FTC does not provide for a presumption of fraud regarding beneficiaries of payments that are controlled by entities non-established in a European Union member State. In this context, the CE considers that the fact for a parent company, established in the Netherlands but controlled by one company established in the Cayman Islands and two companies established in the British Virgin Islands – both being preferred tax regime states as defined by Section 238 A of the FTC -, to whom interest was paid by its French subsidiary, does not constitute a beginning of tax fraud’s evidence.



• Wealth tax-PME tax reduction: the submission of a tax certificate issued by the holding company is not sufficient to benefit from the reduction – Decisions of the Commercial chamber of the French Civil Supreme Court on March 3rd, 2021, No.19-21.161, No.20-11.840, No.20-11.839, No.19- 22.397, No.20-11.838 and No.18-15.826

The French Civil Supreme Court considers that the benefit of the tax reduction, introduced by Section 885-0 V bis of the FTC, may be called into question although the taxpayer acted in good faith and had an tax certificate issued by the company notifying him that he fills the required conditions to benefit from the said reduction, when it appears that this tax certificate is incorrect.

• Dutreil regime-transmission: the FTA publish their comments for public consultation and call into question some principles – Update of the FTA guidelines (BOFIP) on April 6th,2021 – BOI-ENR-DMTG-10-20-40-10 to 40

The FTA launch a public consultation, until June 6th, 2021, of their comments about the Dutreil regime. Concerning the definition of industrial, commercial, artisanal, farming or independent activity, the FTA now refer to the guidelines provided for French real estate wealth tax (“IFI”), which are slightly different (BOI-ENR-DMTG-10-20-40-20 §15). Are now excluded from the benefit of the partial exemption, shares in companies engaged in the rental of furnishes houses or industrial or commercial premises rented with the furniture or equipment necessary for their activity.