The decision handed down by the French Supreme Administrative Court on November 12 2025 (No. 501567) marks an important milestone in the interaction between international anti-avoidance tax rules and the economic exploitation of image rights.
Although the case concerned a high-profile professional football player, the court’s reasoning extends well beyond the world of sport. It provides valuable guidance for artists, performers, and public figures whose image constitutes a core economic asset, particularly where such rights are held through foreign entities.
The legal framework: Article 123 bis of the French General Tax Code
Article 123 bis of the French General Tax Code is a cornerstone of France’s anti-avoidance arsenal applicable to individuals. It allows the French tax authorities to tax, as investment income, the profits or positive income of a foreign entity subject to a preferential tax regime, where a French tax resident holds, directly or indirectly, at least 10% of the entity.
This mechanism applies irrespective of any actual distribution of income. Its purpose is to neutralise the interposition of foreign entities used as ‘cash boxes’ accumulating untaxed or lightly taxed passive income abroad.
However, the scope of Article 123 bis is limited by a decisive condition: the foreign entity’s assets must be mainly composed of financial assets; namely, securities, receivables, deposits, or current accounts. The provision is therefore aimed at entities with a predominantly financial profile, not at operating structures holding non-financial assets.
The key contribution of the decision: image rights are not financial assets
In the case at hand, the French tax authorities sought to apply Article 123 bis to a Panamanian company wholly owned by a professional footballer, which received substantial income from the licensing of his image rights. According to the authorities, the company’s assets were predominantly financial, either because image rights should be classified as receivables or because they should be taken into account at their book value.
The Conseil d’État firmly rejected this approach.
First, it held that the right to exploit a person’s image does not constitute a receivable within the meaning of Article 123 bis. While image rights are exploited through contractual arrangements giving rise to reciprocal obligations, the right itself cannot be equated with a financial receivable comparable to a loan, bond, or similar financial instrument.
Second, the court confirmed that the assessment of the asset composition must be based on the real (or fair) value of the assets, where the taxpayer provides credible evidence supporting such valuation. In this case, an independent expert report demonstrated that the image rights represented more than 55% of the company’s total assets. Since the tax authorities did not challenge this valuation before the lower courts, it had to be accepted.
A decision with a broader reach than professional football
The court’s reasoning applies to any individual whose image, name, or reputation is commercially exploited, including artists, musicians, actors, models, influencers, speakers, and other public figures.
The decision confirms that image rights fall within a distinct patrimonial category, closer to intellectual property or other operating intangible assets than to passive financial investments. As such, structures genuinely dedicated to the exploitation of image or personality rights cannot automatically be treated as financial cash boxes for the purposes of Article 123 bis.
Technical implications and outlook: from accounting to economic substance
The November 12 2025 decision introduces a more sophisticated technical framework for applying Article 123 bis, shifting the focus from formal accounting to economic reality.
The primacy of fair market value over book value – for many creators and athletes, the book value of their image rights is zero because the asset was created internally rather than purchased. The court’s validation of fair market value prevents a ‘mechanical’ application of Article 123 bis where an entity appears ‘financial’ simply because its most valuable operating assets are not reflected on the balance sheet.
The burden of proof and expert appraisal – this ruling establishes that once a taxpayer provides a robust, independent economic appraisal of their intangible assets, the burden of proof shifts to the tax administration. To prevail, the authorities must substantively challenge the valuation methodology (e.g., the ‘relief from royalty’ method or a discounted cash flow analysis) rather than merely relying on accounting entries.
A shield, not a sword – while the decision limits the ‘automatic’ look-through taxation of Article 123 bis, it does not prevent the authorities from using the abuse of law (abus de droit) doctrine under Article L. 64 of the Tax Procedure Code. If a structure lacks ‘substance’ – meaning it does not actually manage or promote the image rights but merely acts as a passive conduit – it remains vulnerable to challenge.
Legal qualification of ‘receivables’ – by strictly defining ‘receivables’ (créances) as financial instruments of debt, the court prevents the administration from broadening the ‘financial asset’ category to include any contract-based intangible. This maintains a clear legal distinction between passive capital income and active operating income.
Ultimately, the Conseil d’État has reaffirmed a crucial boundary between aggressive tax avoidance and the legitimate international exploitation of personal notoriety. For practitioners, the lesson is clear: securing cross-border image rights structures now requires not just legal contracts but a contemporaneous economic valuation file to prove the non-financial nature of the entity's predominance.
