If your company is making profits in France, you should already know that you have to pay what is called the corporation tax (most of the time, due to an international double taxation agreement between your country and France). A recent ruling from the French Supreme Court[1] indicated under what conditions the whole benefit of a foreign company could be imposed in France.

In the situation of the Court’s ruling at stake, a holding located in Brussels declared in France the profits of its French branch (as per the double taxation agreement between Belgium and France).

However, following an audit, French Administration taxed the whole benefit of the holding, estimating that the whole activity occurred in France.

French Administration stated that the registered office (located in Belgium) was fictive and the real registered office (with effective direction) was in France. In other words, the real registered office should be the one where the company’s decision center is located.

This case law is a good example of how the Administration is entrusted with all powers to reconsider the real registered office in order to tax revenues in France.

In this case, the Court supported the Administration’s reconsideration based on the below elements:

• Only three executive board’s appointments occurred in Belgium where the registered office was supposed to be,
• All the necessary services for the activity where located in France,
• All strategic decisions where prepared during meetings in Paris.

In a nutshell, if one of your company/branch is making profits in France, beware of the above tax authority reconsideration: you could be liable to pay a French tax on your whole benefit!

Source: Ruling n°371435 March 7^th 2016, from the « Conseil d’Etat »

[1]     Ruling n°371435 7th of march 2016, from the « Conseil d’Etat »