We know that the interposition by a French taxpayer of a foreign company to hold a financial asset is particularly frowned upon by the French tax authorities when the foreign company benefits from a more favorable tax regime than if it were established in France. The classic angle of attack for the administration is to contest the substance of the foreign company either to request the application of article 123 bis of the CGI, or to contest the opposability of the structure itself on the ground of the ‘abuse of rights.
It is within the framework of this second branch of the alternative that the administration placed itself in order to personally tax a French taxpayer on the capital gain realized by a Belgian company to which he had sold shares of a French company. which had been allocated to him as part of a management package .
The Conseil d’Etat validated the artificial nature of the foreign company for the following reasons: it had not paid for its securities (existence of a vendor’s credit), it had no premises, resources or staff and it had no assets other than the shares in question over which it had no management autonomy given the existence of a shareholders’ agreement. Implicitly, it was noted that the foreign company had benefited from an exemption from capital gains tax, whereas a French company would have been taxed at the normal rate. Finally, the fact that the taxpayer transferred the bare ownership of his securities to his children did not find favor in the eyes of the Council of State.
This decision appears to constitute a clear setback…