• Complete branch of activity: the effective transfer of the staff members involved in the continuation of an autonomous activity is mandatory in order to benefit from the favourable regime – Decision of the French Administrative Court of Appeal (“CAA”) of Bordeaux on June 30th, 2020, No. 19BX00390, Société Béric

The CAA considers that a contribution of a branch of activity under the favourable regime for mergers requires the effective transfer of the staff members involved in the continuation of an autonomous activity both at the transferring company and at the company benefiting from the contribution.

• Tax losses transfer: the change in the activity of the beneficiary may end its right to offset its own losses – Decision of the CAA of Paris on July 16th, 2020, No. 19PA01183, SAS Camy

The CAA considers that by absorbing its subsidiaries, the holding company benefiting from a transfer of tax losses changes its business and loses its right to offset its own previous losses. An appeal is lodged against this decision.

• Equity securities: the holding company must demonstrate their relevance and the existence of its own control and influence – Decision of the CAA of Paris on July 31st, 2020, No. 20PA00033, Société Holdel

The CAA considers that the French tax authorities (“FTA”) may reassess the qualification retained of equity securities in cases where evidence – such as the absence of control or influence with respect to the company’s activity, even jointly with other companies – reveals that the accounting designation does not correspond to their actual tax qualification.

• Reduced rate of Corporate Income Tax (“CIT”): an increase in the turnover threshold is considered – Draft Finance Bill for 2021 on October 20th, 2020

For fiscal years opened as from January 1st, 2021, companies generating a 10 million euros turnover should be allowed to benefit from the reduced CIT rate of 15%.



• Burden of proof: evidence in the sole possession of a party can only be collected from that party – Decision of the French Administrative Supreme Court (“CE”) on June 5th, 2020, No. 425789 and No. 425962, Société Faraday

The CE considers that even if a company has not sufficiently replied to the FTA’s requests for explanations, the FTA must provide the judge with all elements to support its claim.

• FTA’s silence: in the absence of an explicit decision, the Administrative Court may be referred to even more than one year after the tacit dismissal of the taxpayer’s claim – Advice of the CE on October 21st, 2020, No. 443327

The CE considers that the lack of response from the FTA within six months of the presentation of a claim does not trigger any time limit for referral to the administrative court.

• Abuse of law: the safeguard against changes in the FTA’s guidelines does not apply to artificial schemes – Decision of the Plenary Assembly of the CE, on October 28th, 2020, No. 428048

The CE confirms that as a principle, the FTA cannot reassess a taxpayer because the latter, even if he strictly applied an administrative doctrine, has gone beyond its scope. However, in the case of an artificial scheme, the FTA may enforce the abuse of law procedure and reject the safeguard provided for in Section L.80 A of the French Tax procedures Code.



• Transfer pricing: the credit rating assigned in order to establish interest rates charged are in line with market rates must be determined with respect to the inherent situation of the borrowing company – Decision of the CAA of Paris on March 10th, 2020, No. 18PA00608, SAS Apex Tool Group

The CAA judges that the credit rating assigned to loans in the context of studies aimed at demonstrating the conformity of interest rates charged compared to the market rate should be determined according to the intrinsic situation of the borrowing company.

• Cross borders workers: mutual agreements enforcement may be postponed to December 31st, 2020 – Ministry for Economic Affairs and Finance website
An official release would be welcome in order to be fully enforceable to the FTA.

• France and US tax Treaty: retirement savings derived from the US are taxable in the US – Ministerial Answer Le Gleut, Official Journal of the Senate on August 27th, 2020, No. 3712

Income from US retirement plans, whether paid in a lump sum or on a periodic basis, is only taxable in the US pursuant to Section 18, paragraph 1, of France and US tax Treaty signed on August 31st, 1994.

• Tax residence: owning real estate in France is not sufficient to establish the taxpayer’s domicile – Decision of the CE on October 7th, 2020, No. 426124

The CE judges that the fact for a taxpayer to own, in France, companies shares and real estate is not sufficient to constitute, on his behalf, either a permanent household or the center of economic interests, which requires these assets to be income producing.

• Impatriates: even in the absence of exempted salaries, property income can benefit from the exemption – Decision of the CE on October 21st, 2020, No. 442799

The CE rules that the partial exemption of property income for impatriates is not subject to the condition that they actually benefit, on the salaries paid by the company having hired them from abroad, from the exemption provided for in Section 155 B, I of the French Tax Code (“FTC”).



• Social levies: payments made by CERN (Geneva) retired staff must be refund – Decision of the CE on September 9th, 2020, No. 432985

The CE judges that retirement income paid by the CERN with respect to rights acquired during a former employment relationship benefit from the protection of European Union law exempting these payments from being subject to French social levies.

• “Dutreil transmission” and holding companies: the Dutreil exemption regime may benefit to the shares in a mixed holding company – Decision of the business chamber of the French Supreme civil Court on October 14th, 2020, No. 18-17.955 FS-PB

The French Supreme civil Court indicates that the shares of a holding company, managing its group, are entitled by operation of law to benefit from the Dutreil exemption regime pursuant to Section 787 B of the FTC.