Corporations - International - Europe

This chapter is not exhaustive and is limited to broadly outline the tax consequences of the main events occurring when doing business in France. It does not constitute a tax advice or a client - attorney relationship. Materials are not suitable for tax analysis. Visitors are invited to consult a tax lawyer before taking any decision.  
 

 European law supersedes French law. European law includes EU directives, EU regulations (directly applicable in the Member State) and the European Court of Justice cases law.

European Court of Justice confirmed that a French company has the right to challenge French rules applicable to a purely domestic issue on the basis of EU set of law which applies to both domestic and cross border situations. This decision confirmed that EU legislation is a real opportunity for tax matters (ECJ, July 7, 1997, #. 28/95, Plenary session and ECJ, January 7, 2003, # 306/99, Plenary session, Banque Internationale pour l’Afrique Occidentale BIAO) .

There is a specific European agreement procedure permitting to avoid double taxation for EU companies located in two different Member States. EU members must find a solution to solve all double taxation issues.

A decision under EC arbitration convention to solve double taxation related to transfer pricing issues between EU Member States was rendered for the first time ever on May 19, 2003. The case involved a transfer pricing issue between a French parent company and related parties resident in 6 other Member States.

IMPORTANT: In line with the decision of the European Court of Human Rights (ECHR) which held that tax disputes (§24) "fall outside the scope of civil rights and obligations, despite the pecuniary effect which they necessarily produce for the taxpayer", the French Supreme Civil Court abandoned its previous jurisprudence allowing taxpayers to claim the benefit of article 6(1) of the European Convention on Human Rights “ECHR” in tax disputes. The French Supreme Administrative Court always considered that this article was not relevant for tax proceeding.
As a consequence all pending tax disputes based on article 6(1) ECHR are invalid except when challenging tax penalties.
 

GOOD TO KNOW: Interest and Royalties Directive - Implementation measures

The European Commission recently published a survey on the implementation of the Interest and Royalties Directive to provide an overview of the implementation of the Interest and Royalty Directive and application of Article 15(2) of the Agreement between the EU and the Swiss Confederation in the Member States covered (Belgium, Czeck republic, Denmark, Germany, Estonia, Spain, France, Ireland, Italy, Cyprus, Luxembourg, Hungary, Malta, Netherlands, Austria, Slovenia, Slovakia, Finland, Sweden and UK).