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

Geopolitical rivalry is reshaping global tax cooperation, as the OECD’s minimum tax framework fragments and the EU grapples with the ensuing legal fallout
LED Taxand’s partner tells ITR about entrepreneurial inspirations, the importance of people skills, and what makes tax cool
Shiny new offices like Ryan’s in London Bridge aren’t just a cost – they signal that a firm is willing to align with its clients’ interests
Darren Graves will succeed Richard Houston, who is set to lead Deloitte EMEA; in other news, Morgan Lewis hired a three-partner tax team in New York
India also signed its first-ever bilateral APAs with France, Ireland, Indonesia and Sweden last year, the CBDT revealed
Chile’s revamped GAAR marks a shift toward structural scrutiny, pushing MNEs to strengthen tax governance, economic substance and compliance strategies
New reforms represent the most seismic shift in Canadian TP legislation since its enactment and a clear inflection point for MNEs, ITR has heard
Spain did not transpose EU VAT rules for SMEs or works of art; in other news, an increased VAT threshold came into force in South Africa
While the IBS incorporates taxable events previously covered by state and municipal taxes, its governance and operational logic represent a significant departure from the legacy model
The new office on the fourth floor of 4 More London will span 14,230 square feet, with the potential to expand to the first and second floors
Gift this article