Abuse of law: the artificial scheme to conceal the remuneration of a repurchase agreement constitutes an abuse of law – Decisions of the Administrative Court of Appeal (“CAA”) of Versailles on April 1st, 2021, No. 20VE002388 and 20VE002389, Société Dassault Systèmes SE

The CAA rules that a parent company which, by means of an artificial scheme, conceals the true nature of a repurchase agreement in order to place it under the parent-subsidiary regime, commits an abuse of law.

Capital loss: recapitalization of a subsidiary in difficulty and limited deduction of capital losses – Decision of the French Administrative Supreme Court (“CE”) on April 20th, 2021, No. 429467, Société Catana Group

In the event of a sale of securities after a contribution to a company in difficulty, the CE considers that only securities issued following a capital increase are subject to the limited deduction of capital losses on short-term sales, as provided for in Section 39 quaterdecies, 2 bis of the French Tax Code (“FTC“).



Abnormal Act of Management (“AAM”): the acquisition of a temporary usufruct does not constitute an AAM when it allows to save rents – Decision of the CAA of Nantes on April 15th, 2021, No. 19NT02197, SAS Recam Sonofadex

The CAA considers that the acquisition of the temporary usufruct of real estate does not necessarily constitute an AAM, in particular when it is evidenced that the company has not suffered any impoverishment. This is the case when the transaction has allowed the company to save rents.

Right of communication: the French Tax Authorities (“FTA”) may exercise their right of communication during a personal tax audit (“ESFP”) and notify a single tax reassessment – Decision of the 9th and 10th chambers of the CE on May 5th, 2021, No. 438223

The right of communication exercised by the FTA at the same time as an ESFP does not have the effect to rule the reassessments attached to the first procedure under the obligations provided for the second procedure, even if all the reassessments intervene in a single tax reassessment notice.



Interest deductibility: the former “anti-hybrid” provision of Section 212, I-b of the FTC is compliant with the principle of free movement of capital – Decision of the CAA of Versailles on February 9th, 2021, No. 18VE02688

The CAA of Versailles considers that the former provision limiting the deductibility of interest paid to an affiliated company not liable to a minimum taxation does not characterize an indirect discrimination against the principle of free movement of capital.

Withholding Tax (“WHT”): WHT on dividends received by a foreign insurance company is contrary to the free movement of capital – Decision of the 3rd and 8th chambers of the CE on May 11th 2021, No. 438135, Sté UBS Asset Management Life Ltd

French sources Dividends received by an insurance company established in France are subject to WHT on their net amount (after offsetting a technical provision set up by the insurance company to meet with its commitments), whereas dividends received by companies established abroad are subject to WHT on the gross amount. The CE considers that this difference is likely to constitute an infringement of the principle of free movement of capital.

Transfer of registered office: the transfer of the registered office is deemed to take place on the date of its opposability to third parties – Judgment of the Paris Administrative Court on May 26th, 2021, No. 1901645, Sté FGI

The Paris Administrative Court considers that the transfer of registered office of a company liable to corporate income tax in another Member State of the European Union (or to certain States party to the Agreement on the European Economic Area) takes place on the date on which it is effective against third parties and in particular against the FTA.

Permanent establishment: a building rented out does not constitute a permanent establishment – Decision of the Court of Justice of the European Union on June 3rd, 2021, No. 931/19, Titanium Ltd

A building rented out in a Member State by a company which does not have its own staff to carry out rental management services (which are provided for by a third company mandated for this purpose) does not constitute a permanent establishment, either as a lessee or as a supplier, for VAT purposes insofar as it does not have any human resources enabling it to act independently.

Permanent establishment and VAT: the attribution of profits to a permanent establishment in France is not sufficient to characterize the existence of a distribution of income for VAT purposes – Decision of the 9th and 10th chambers of the CE on June 4th, 2021, No. 437988, min. c/ Sté Artelim and Sté Artelim

According to the CE, it is not because the French profit computed by the FTA is higher than the overall profit declared by the foreign company (and taxed in its State of residence) that it reveals the existence of a distribution.

Tax residence: the CE determines the taxpayer’s tax residence on the basis of the treaty criterion of nationality – Decision of the 9th chamber of the CE on June 9th, 2021, No. 431551

Considering that the circumstances of the case did not make it possible to determine the place where the taxpayer’s personal relations were closest or the place where he usually stayed, the CE applied the residual criterion of nationality to determine the tax residence of the taxpayer.



Gift: family gifts in cash for the servicing of the future main residence’s land (“viabilisation”) can benefit from the temporary exemption of €100,000 – Ministerial answer Loiseau on June 22nd, 2021, No. 37231

The FTA exclude from the gifts giving right to the exemption referred to in Section 790 A bis of the FTC the sums allocated to the acquisition of land for building, but accept those allocated to the servicing of the land of the future main residence and to the works of extension, enlargement or raising of the pre- existing main residence.