France: Appeal Court ruling on the deduction in France of foreign final losses

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement


France: Appeal Court ruling on the deduction in France of foreign final losses

taquet.jpg

raingeard.jpg

Jacques Taquet


Emmanuel Raingeard

The administrative appeal court of Versailles rendered a decision on February 26 2013 regarding final losses of foreign subsidiaries of a French company. The Court held that French legislation, which does not allow a French parent to deduct tax losses of EU subsidiaries which the latter cannot carry forward because of local legislation which limit the period for the carryover of tax losses, is actually compatible with EU law. The French taxpayer had offset losses of its Italian and Polish subsidiaries. These losses could not be carried forward locally because of Italian and Polish legislation which limit the period for the carry forward of losses.

The court ruled that the restriction is justified and does not go beyond what is necessary to attain the objectives pursued. The Court seems to imply that the decision would have been different had the losses become "final" following a liquidation of the EU subsidiary.

This decision will probably be examined by the French Supreme Court. This will give an opportunity to clarify the Marks & Spencer (C-446/03) ruling that was recently confirmed in the A Oy case (C-123/11). It seems now clear that where the loss of tax losses results from the liquidation of an enterprise, they can be considered as final losses. On the other hand, the solution is far less clear where tax losses are lost as a result of local legislation which limits the period during which losses can be carried forward.

Jacques Taquet (jacques.taquet@fr.landwellglobal.com)

Tel :+33 1 56 578360

Emmanuel Raingeard (emmanuel.raingeard@fr.landwellglobal.com)

Tel: +33 1 56 574014

Landwell & Associes – member of the PwC network

more across site & shared bottom lb ros

More from across our site

Ex-EY and Hourani & Partners leader Zain Satardien is using flexible staffing and AI-enabled systems to test a leaner model for specialist legal and tax advice
The big four firm is rightfully prioritising transparency and accountability as it seeks to rebuild from its scandal, but a glaring structural issue remains
A recent hiring flurry has taken the firm’s number of partner appointments this year to 121 and put it on track to hit 160 partner target early
The move brings specialist tax and litigation capability to EY as it seeks to close the gap on Baker McKenzie and Venezuela’s leading local firms
The industry’s response to AI requires an unfamiliar ingredient as firms battle to shape their futures
The ambitious big four challenger firm has also appointed ex-RSM partner Brad Ashton to build out its customs and global trade practice
The big four firm allegedly reviewed backdated documents and signed off on accounts that removed hundreds of millions of dollars of Abramovich’s assets
New Tier 1 entrants and an expanding cohort of established players indicate that law firms are becoming increasingly credible challengers in Europe's TP market
Awards
Leading firms and individuals gathered in Dubai to celebrate standout legal, dealmaking and tax work across the region
Tax authorities want more revenue, have better tools to find it and are increasingly willing to fight for it
Gift this article