• Corporate Income Tax (“CIT”): a property dealer is not disqualified for one year without resale – Decision of the 3rd and 8th chambers of the French Administrative Supreme Court (“CE”) on March 18th 2020, No. 425443, min. c/ SCI ESPM

By a decision of principle, the CE considers that the absence of resale during a year should not exclude the liability to CIT of a French real estate company (société civile immobilière), which in previous years carried on the activity of property dealer.


• Election to CIT: requirements for electing for CIT are softened in certain cases for French limited liability companies (SARL) transformed into one-shareholder limited liability companies (EURL) – Decision of the 9th and 10th chambers of the CE on March 20th 2020, No. 426850 and No. 426857, M. B. and Sté Le Saint’E

An EURL, set up by combining in one hand the shares of a SARL liable to CIT, which has elected for CIT in its bylaws and has filed a tax return under this regime, is deemed to have validly elected for CIT.


• Health crisis: the filing of corporate documents can be done by electronic means – BOI-DJC- COVID19-50 on May 11th 2020

Deeds certifying the transformation of a company, the increase, depreciation or reduction of its equity, as well as deeds drafted by a public notary and those voluntarily submitted for formalities may be filed with the registration services by electronic means.


• Net financial expenses capping: new French Tax Authorities’ (“FTA”) guidelines – BOI-IS-BASE- 34-40; BOI-IS-GPE-20-110 on May 13th 2020

The FTA publish their final guidelines on the mechanism for capping the deductibility of net financial expenses. Many issues have been clarified and made more flexible than in the initial guidelines. The adjustments made to the regime by the Finance Act for 2020 are also commented, in particular the regime for autonomous companies for which the FTA maintain a strict position.


• Favourable regime for mergers: mergers without exchange of securities are now admitted to the favourable regime – Decree No. 2020-623 on May 22nd 2020

As of May 25th 2020, acts of merger and demerger between sister companies wholly owned by the same parent company may be registered free of charge even if no exchange of shares is carried out. As a reminder, until now, only deeds certifying the absorption by a parent company of a wholly-owned subsidiary could be registered free of charge.



• Health crisis: the health emergency status is extended until July 10, 2020 – Law No. 2020-546 on May 11th 2020, Article 1

This decision entails an extension of the statute of limitation period for the FTA to conduct a tax audit (which should have expired on December 31st 2020) until June 1st 2021.



• VAT: VAT permanent establishment of a foreign parent company – Decision of the ECJ on May 7th 2020, Case C-547/18, Dong Yang Electronics sp. z o.o. v Dyrektor Izby Administracji Skarbowej we Wrocławiu

The European Court of Justice (“ECJ”) considers that the existence, in the territory of a Member State, of a permanent establishment of a company established in a third State cannot be inferred by a service provider merely because that company has a subsidiary there. Moreover, this service provider is not required to inquire about the contractual relations between the two entities.


• European Union blacklist: an update with effect as from October 1st 2020 – European Commission press release on May 7th 2020

The Commission has revised its list, which is now more in line with the lists published by the FATF. Listed countries: Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe. Countries that have been removed from the list: Bosnia and Herzegovina, Ethiopia, Guyana, Lao People’s Democratic Republic, Sri Lanka and Tunisia. The regulation should only apply as from October 1st 2020.


• Declaration of cross-border schemes: towards an extension of the deadlines for the declaration of cross-border schemes – European Commission proposal for a Directive on May 8th 2020

On May 8th 2020, the European Commission published a proposal for a Directive aimed at postponing the reporting requirements of the DAC 6 Directive by three months due to the Covid-19 crisis. This proposal consists in an amendment to Directive 2011/16/EU on the exchange of information.


• Bank accounts opened in Switzerland: the Swiss Federal Tax Administration (“AFC”) has authorised the transmission of almost 45,000 account numbers opened with the Swiss bank UBS – AFC decision on administrative assistance on May 12th 2020

The taxpayers concerned had until June 11th 2020 to appeal to the Federal Administrative Court against this decision of the AFC.



• Tax incentive: rent waivers in favour of companies are encouraged – Law No. 2020-473 on April 25th 2020, Article 3

Lessors taxed on profits under the real estate income regime (revenus fonciers) are not taxable on the rents (and accessories relating to a real estate rented to a company) that they renounce to collect between April 15th and December 31st 2020. They may, however, continue to deduct the corresponding real estate expenses. Lessors taxed on profits under the Industrial and Commercial Profits regime (“BIC”) may deduct from their professional taxable income the amounts they have waived.


• Tax reduction: the maximum limit for gift to organizations assisting people in difficulty is increased – Law No. 2020-473 on April 25th 2020, Article 14

The annual maximum amount of payments entitled to a specific tax reduction (corresponding to 75% of the amount of the payments) is increased from €552 to €1,000. Payments in excess of €1,000 are eligible to a standard tax reduction, at the rate of 66%, up to the limit of 20% of the taxable income.