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

As the firm embarks on a major shakeup of its EMEA partnerships, some staff will be watching nervously
The buyout of Hucke and Associates continues Ryan’s streak of firm acquisitions; in other news, a UK appeal against VAT on private school fees was dismissed
Tax teams are responding to usual client demand in the region, albeit with increased working from home flexibility, local sources indicate
A 120-plus-day delay to refunds would cost taxpayers almost $3bn in additional interest, the Cato Institute warned; plus indirect tax updates from February
The Office for Budget Responsibility’s pessimistic pillar two forecast accompanied the UK chancellor’s muted Spring Statement, dubbed ‘as dull as possible’ by one adviser
Digital tax reform is dissolving the old ‘temporal buffer’, forcing systems, institutions, and professionals to adapt as real-time reporting reshapes governance, capability, and compliance
Our first instalment features analysis of Deloitte’s landmark EMEA merger, Donald Trump’s Supreme Court tariff showdown and Venezuela’s tax evolution
While some believe it could have a positive effect on the wider advisory landscape, others argue that HMRC’s ‘red tape’ exercise won’t deter bad actors
The political optics of the US’s carve-out deal are poor, but as the Fair Tax Foundation’s Paul Monaghan writes, it preserves pillar two’s guiding ethos
The big four firm reportedly sent ‘threatening’ correspondence to Unity Advisory over its hiring of ex-PwC partners; plus tax recruitment news from the week
Gift this article