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 2025

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

The boutique Australian firm’s TP award recognition proves that world-class advisory services aren’t limited to the ‘big four’, the firm’s founder tells ITR
Canadian and Indian dual VAT models have been a source of inspiration for the Brazilian model, but the latter has unique and innovative features, the OECD paper claimed
More sophisticated use of technology, heightened TP scrutiny and stricter filing requirements are making South African Revenue Service audits a formidable challenge
The hire of Doug Wick expands Baker McKenzie’s state and local tax practice and adds to the firm’s growing ex-IRS expertise
One year after Nuwaru joined the WTS network, leaders James Jobson and Matthew Missaghi reflect on the firm’s mission to offer mid-tier pricing but deliver top-tier results
Join ITR's Head of Research, John Harrison, for an overview of key dates, new developments, best practices, and more for next year’s research cycle
The president’s tariff regime has already caused misery for taxpayers. Losing at the Supreme Court would mean it was all for nothing
The US itself was the biggest loser of tax revenue to American multinationals’ profit shifting, the Tax Justice Network reported; in other news, firms made key tax hires
Identifying who will bear the costs and concerns around confidentiality are issues yet to be resolved, advisers say
As multinationals embed tax technology into their TP functions, a new breed of systems – built on multi-model databases – is quietly transforming intercompany pricing logic
Gift this article