French tax consolidation: it is allowed to set up a consolidated tax group with a subsidiary since the date of its acquisition – Update of the French Tax Administration (“FTA”) guidelines (BOFIP) on May 24th, 2021 – BOI-RES-IS-000088

A company that acquires, on the first day of its fiscal year, at least 95% of the share capital of another company (or securities that bring its shareholding to at least 95% of the share capital) may set up a consolidated tax group with its subsidiary as from that fiscal year (provided that all the other conditions of the tax consolidation regime are met). The acquisition date must correspond to the opening date of the fiscal years of both companies.

Value Added Tax (“VAT”): the FTA introduce the new (optional) Single VAT Office that enters into force on July 1st, 2021 – Update of the impô website on April 22nd, 2021

The new optional VAT regime, which will allow companies carrying out transactions to non-taxable persons to declare and pay VAT due in one Member State only without having to register with the tax authorities of each Member State of consumption, will enter into force on July 1st, 2021.

Tax transparency: the European Parliament and Council have concluded an historic agreement concerning the disclosure of taxes paid by multinationals – Press release on June 2nd, 2021

Multinational companies (and their subsidiaries) with annual revenues exceeding €750 million and operating in more than one country will have to publish on the internet the amount of tax they pay in each European Union member State. The agreement must be approved during the coming months by the Committee on Economic and Monetary Affairs, the Committee on Legal Affairs, the (whole) Parliament and the Council.

Abnormal act of management: an interest-free cash advance to a subsidiary is admitted if it occurs in the parent company’s own interest – Decision of the 1st chamber of the French Administrative Court of Appeal (“CAA”) of Nantes on May 17th, 2021, No. 19NT02801

An interest-free loan (or a debt waiver) granted by a parent company to its subsidiary may constitute an abnormal act of management unless the parent company can be considered to have acted in its own interest. The CAA of Nantes considers that an interest-free loan granted to a subsidiary in order to prevent it from filing for bankruptcy does not justify the parent company’s own interest.


Sale of securities at a reduced price: the existence of a carry agreement may characterize a gift intention and lead to the qualification of hidden distribution – Decision of the 9th and 10th chambers of the French Administrative Supreme Court (“CE”) on April 20th, 2021, No.434255

The CE considers that in order to requalify a sale of securities at a reduced price as a gift representing a hidden advantage, the FTA must provide (i) proof of a significant difference between the agreed price and the market value of the securities and (ii) the intention, for the seller to grant and for the purchaser to receive a gift because of the sale’s conditions. The CE judges that, in dismissing, as irrelevant, the fact that the purchaser of the securities only acquired them with a view to resale them to a third-party under a carry agreement, the CAA erred in law since this argument may be used to demonstrate the absence of intention to grant or receive a gift.



Foreign companies: a Delaware LLC can be assimilated to a French corporation (subject to Corporate Income Tax – CIT”) – Decision of the 9th and 10th chambers of the CE on April 2nd, 2021, No.427 880

The CE considers that a company whose purpose is to carry out any activity in accordance with Delaware law, whose securities are freely tradable (subject to certain conditions) and whose partners’ financial responsibility is limited to their contributions, may be assimilated to a French SAS, subject to CIT, regardless of the profit-making or non-profit nature of its activity.

Digital Services Tax (“GAFA Tax”): the FTA update their comments – Update of the website on April 8th, 2021 – BOI-TCA-TSN-10-10-10 to BOI-TCA-TSN-30-20

The FTA provides details, notably on the taxable services, the person liable for the payment and the computation of the tax to be paid.

Free movement of capital: the difference in tax treatment of taxpayers receiving income from UCITS, depending on their state of residence and legal form, is contrary to EU law – Decision of the Court of Justice of the European Union (“EUCJ”) on April 29th, 2021, No. C-480/19

The EUCJ considers that Sections 63 and 65 of the Treaty on the Functioning of the European Union prohibit the tax practice of a Member State which consists in differentiating, for the taxation of individual taxpayers’ income, the tax treatment applied for income paid by a UCITS established in another Member State from that paid by a UCITS established in the first Member State, of a different legal form.


Transfer of shares and gift: when the securities sold were acquired by gift with reservation of legal use (“usufruct”), the capital gain tax is due by the legal user (“usufructuary”), subject to certain conditions – Decisions of the 9th and 10th chambers on April 2nd, 2021, No.429187

The CE rules that in the event of a sale of securities whose ownership is split, the legal user remains solely liable for the capital gains tax when the gift agreement with reservation of use of the securities provides that the legal user has the option to reinvest the gains from the sale of the securities.

Tax reductions: the “IR PME” regime’s 25% increased rate entered into force on May 9th, 2021 – Ministerial Decree No. 2021-559 on April 6th, 2021

The “IR-PME” regime, as amended by Finance Law for 2021, extending the increased rate of 25% provided for the tax reduction to payments made until December 31st, 2021 in connection with subscriptions to the share capital of “PME” (i.e., small and medium companies), entered into force on May 9th, 2021.

Gifts: a Priority Question of Constitutionality (“QPC”) is transmitted to the French Constitutional Court concerning the date on which the gift must be evaluated – Decision of the French Civil Supreme Court (“CC”) on May 12th, 2021, No. 20-21.109

The CC questioned the conformity of Section 757 of the French Tax Code – which provides that duties on gifts are computed on the value of the hand gift on the day of its declaration or registration or on its value on the day of the gift, if this value is higher – with the constitutional principles of equality of taxpayers before the law and of legal security.