French Supreme Research Articles

Withholding Tax and Equity-Linked Financial Contracts: Has France Taken A Step Closer to Section 871(m) of the US Internal Revenue Code?

On 15 February 2023, the French tax authorities adopted an unprecedented interpretation of article 119 bis(2) of the French Tax Code, permitting its application to certain equity-linked financial contracts entered into by French banks in a cross-border context. The French Supreme Administrative Court ruled that the administrative guidelines were unlawful. In the authors’ opinion, that is fortunate given the doubts surrounding the legality and the relevance of these guidelines. The only way forward might be for the legislator to intervene.

Latest Twist in the Komstroy Saga

This case note provides an analysis of the Paris Court of Appeal’s (the Court of Appeal) second annulment (the Second Annulment), dated 10 January 2023, of an arbitration award rendered in favour of Energoalliance ltd (Energoalliance) under the Energy Charter Treaty (ECT) in 2013. The case note focuses on the interpretation of the term “Investment”. The Second Annulment follows a first Court of Appeal annulment that was set aside by the French Supreme Court (Supreme Court) due to its incorrect interpretation of the term “Investment”. The Second Annulment, which applied a preliminary ruling of the Court of Justice of the European Union (CJEU), is instructive with regard to the factual circumstances which courts in EU Member States (Member States) will consider in determining whether a debt can qualify as an “Investment”. More specifically, the Second Annulment addresses the qualities which define an asset as “commercial” and, therefore, preclude it from being an “Investment”. Some ambiguity, however, remains in the Second Annulment with regard to the term “commercial” due, in the opinion of the authors, to the inconsistency between certain findings in the Supreme Court’s annulment of the first Court of Appeal annulment, and the CJEU’s preliminary ruling.

Latest Twist in the Komstroy Saga The Definition of “Investment” under the ECT as Interpreted by the Paris Court of Appeal in Its Second Annulment Decision

This case note provides an analysis of the Paris Court of Appeal’s (the Court of Appeal) second annulment (the Second Annulment), dated 10 January 2023, of an arbitration award rendered in favour of Energoalliance ltd (Energoalliance) under the Energy Charter Treaty (ect) in 2013. The case note focuses on the interpretation of the term “Investment”. The Second Annulment follows a first Court of Appeal annulment that was set aside by the French Supreme Court (Supreme Court) due to its incorrect interpretation of the term “Investment”. The Second Annulment, which applied a preliminary ruling of the Court of Justice of the European Union (cjeu), is instructive with regard to the factual circumstances which courts in EU Member States (Member States) will consider in determining whether a debt can qualify as an “Investment”. More specifically, the Second Annulment addresses the qualities which define an asset as “commercial” and, therefore, preclude it from being an “Investment”. Some ambiguity, however, remains in the Second Annulment with regard to the term “commercial” due, in the opinion of the authors, to the inconsistency between certain findings in the Supreme Court’s annulment of the first Court of Appeal annulment, and the cjeu’s preliminary ruling.

Transfer Pricing and Valuation of Intangible Assets: The French Supreme Administrative Court Opens a Debate about the Weighting of Methods

In its decision of 27 October 2022 in the Sacla case, the French Supreme Administrative Court overturned the lower administrative courts’ decisions in a long-running transfer pricing battle over how to value taxpayers’ brands. Whereas the court-appointed expert witness calculated a weighted average from the results of applying the historical cost-based method and the discounted cash-flow method, the lower courts relied only on the latter method without sufficient reasoning, the French Supreme Administrative Court found. The case at stake went deeply into details in the valuation process. However, the French Supreme Administrative Court only overturned the decision on the grounds of distortion, which means there are still outstanding issues to be tackled.

The French Supreme Administrative Court Finds the Use of Facial Recognition by Law Enforcement Agencies to Support Criminal Investigations 'Strictly Necessary' and Proportional

The French Supreme Administrative Court Finds the Use of Facial Recognition by Law Enforcement Agencies to Support Criminal Investigations 'Strictly Necessary' and Proportional

The specificity of the French concept of a group of companies — analysis based on the judgment of the French Supreme Court of 4th February 1985 in the Rozenblum case

The specificity of the French concept of a group of companies — analysis based on the judgment of the French Supreme Court of 4th February 1985 in the Rozenblum case

Decision of the French Supreme Court on the 3% Tax Filing Obligation

In this note, the authors comment on a recent decision of the French Civil Supreme Court, which confirmed the position of the tax authorities that an exemption from the 3% tax on real estate should not be granted where the taxpayer fails to fulfil certain information disclosure requirements.

Functional Analysis Goes Before the French Supreme Administrative Court: A Short-Term Win for the Taxpayer, Long-Term Uncertainty for the Future

This note presents a case decided by the French Supreme Administrative Court on 4 October 2021. The main takeaway from the decision is that profit allocation needs to be based on a precise functional analysis. This means, in particular, that the use of the term “principal entrepreneur”, in practice, is irrelevant in determining whether or not a company should be allocated a residual profit or loss. Also, specific risks may justify temporary reduced profitability in certain instances.

Profit Shifting and Comparability: The French Supreme Administrative Court Provides Useful Clarification on Functional Analysis and the Concept of Routine Entity

In two decisions of 4 October 2021 (SAS RKS and SAS Holding SKF France), the French Supreme Administrative Court (Conseil d’Etat) has confirmed the need to conduct a detailed and precise functional analysis that cannot be limited to the simplistic opposition between the concepts of principal entrepreneur and routine entity.

Restriction by Object: the French Banking Fee Saga

The French supreme court, the Cour de cassation, recalled in the recent Cheque-Image decision that a strict interpretation must be given to the notion of restriction of competition by object. Therefore, the notion can only be used for infringements considered as serious threats to competition, based on experience gained. The Cheque-Image case, decided by the French Autorité de la concurrence (the FCA) as long ago as 2010, is a case of ‘unusual scale’, both procedurally as well as on substance.1 Not only did the case trigger a seven-year meticulous investigation by the FCA,2 but it also led jurisdictions at every level of the French legal order to give rulings over more than ten years. More significantly, the Cheque-Image case now constitutes an important precedent for the FCA and French jurisdictions. In the early 2000s, banks started to digitise their cheque clearing processes....

The French Supreme Tax Court Secures Its Hold on the Tax Bases of Digital Enterprises by Reshaping the Dependent Agent PE Concept

In this article, the author comments on the French Supreme Court’s Decision in Conversant, which addresses the test for determining whether a dependent agent permanent establishment (DAPE) exists. The author, after providing background details on the facts of the case and an historical overview of the DAPE provision, shows how the decision is consistent with previous decisions of the Court and the economic principles that underlie the international tax system originally established by the OECD Model.

Chapitre 5. La filiación del menor nacido en el extranjero mediante la técnica de gestación por sustitución ante la jurisdicción francesa y el tribunal europeo de derechos humanos

As gestational surrogacy was forbidden in France in July 2015, the French supreme court decided to depart from previous case-law on the matter after the European Court of Human Rights (ECHR) ruled against France in four separate cases. Now, (as in the April 2017 communication1), the French Cour de Cassation has ruled that in the case of gestational surrogacy carried out abroad, the birth certificate of a child born by way of such method may be added to the French civil register along with the father’s name and without the mother’s name as she did not deliver birth.The article provides an analysis of this change in case-law. First part will examine the evolution of gestational surrogacy-related case-law and the measures taken by the French legislator on the matter. Second part will focus on the Cour de cassation’s turnaround in case-law that followed the ECHR ruling against France on the issue of the approval by domestic law of the legal relationship established between a French biological father and a child born abroad as a result of surrogacy treatment.

French Supreme Administrative Court Finds Taxpayer in ValueClick Case Used an Agency Permanent Establishment to Sell Online Advertising Services in France through Local Subsidiary

In this article, the author considers the implications of the recent decision of the French Conseil d’État (Supreme Administrative Court) regarding the recognition of a hidden agency permanent establishment that was used by the Irish company to sell online advertising services in France, aided by a local subsidiary.

Eqiom Revisited: The French Supreme Administrative Court Applies the Beneficial Owner Test under the EU Parent Subsidiary Directive

In this note, the author discusses the first French Supreme Administrative Court decision to apply the ECJ principles outlined in the Danish beneficial ownership cases in the context of the EU Parent-Subsidiary Directive (90/435).

French Supreme Administrative Court Finds ValueClick Used Agency PE to Sell Online Advertisement Services in France: Trial but No (Profit) Attribution

French Supreme Administrative Court Finds ValueClick Used Agency PE to Sell Online Advertisement Services in France: Trial but No (Profit) Attribution

Question tags in Cameroon English

Although English is one of the two official languages in Cameroon, it is seldom used out of official circles where indigenous languages, French, and Pidgin English reign supreme (Jikong & Koenig, 1983). This has made the language a matter of concern for teachers, learners, and researchers. An aspect of the language which has so far been little investigated, but which is significant to English proficiency, is question tags. In fact, question tags contribute tremendously to the flow of language. They are ‘a very conspicuous phenomenon of spoken language’ (Tottie & Hoffman, 2006: 284). These short questions (tags), tagged onto a main statement (the anchor) play an important role in spoken English. While the question tag is taught from Sixième to Terminale (Grade 8 to Grade 13, i.e. the first to last years of secondary education in the Francophone subsystem of education), and from primary to secondary school in the Anglophone subsystem of education in Cameroon, researchers are still to question its teaching against the backdrop of its actual use in a country where the nativisation process of English is generally agreed upon (Schneider, 2009). Also, given that the canonical ‘type of tag question with reversed or constant polarity, (. . .) is typical of English’ (Tottie & Hoffman, 2006: 283), its teaching (textbooks focus solely on question tags with reversed or constant polarity) in a non-native setting like Cameroon is likely to foretell a conscious or unconscious desire to keep a certain standard of English. If one concurs with Schneider (2009) that Cameroon is on Phase Three of the Dynamic model (at least in the Anglophone part of the country) – that is, Nativisation where ‘structural nativization has made substantial progress’ (p. 298) – then keeping a native-like standard on school programmes (Ministry of Secondary Education, 2014), textbooks (see for illustration the English textbook Forbin et al., 2019), and official examinations would be likely to indicate some contradictions as per the apparent desire to cut the umbilical cord with the former colonial power.

MusicMatic - The French Supreme Court’s Decision on Creative Commons Plus (CC+) Commercial Licensing and Mandatory Collective Management of the Right to Remuneration for Communication to the Public of Commercial Phonograms

The French Supreme Court established that businesses using on their premises devices provided by third parties for making background music are per- forming an act of communication to the public in the sense of Art. L214-1 of the French Intellectual Property Code (CPI). The Court qualified commercially licensed phonograms, also published under Creative Commons non-commercial licences (CC BY-NC-ND 3.0) on the Jamendo online platform, as ‘‘phonograms published for commercial purposes’’. According to the Court, the right to remuneration for communication to the public of phonograms published for commercial purposes cannot be contractually waived by performers. The right to remuneration is subject to mandatory management by a collective management organisation (CMO) regardless of whether rightholders have explicitly contractually entrusted the exercise of their rights to the CMO. Mandatory collective management of the right to remuneration for communication to the public of phonograms published for commercial purposes is compatible with EU law. The Supreme Court declined to refer the question of the compatibility of mandatory collective management to the Court of Justice of the European Union (CJEU), considering that the law is sufficiently clear in this regard.

The Effect of Amiabe Resolution of Disputes’ Clauses on Right of Litigation in Iranian and French Law

Nowadays the stipulation of clauses of amiable resolution of disputes, especially mediation and conciliation clauses is a growing trend around the World. But in the French Jurisprudence, the effect of these clauses on right of litigation was unclear for decades. The position of French Jurisprudence in this respect was on change; sometimes it denies any effect for these clauses, then it recognizes the absolute validity for them. Finally in 2003 French Supreme Court recognize the stipulation of these clauses as the obstacle of action and declare the non-acceptance adjudication as the sanction of non-fulfillment of these clauses. Although this decision offered cleare guidance in respect of effect of these clauses, it did not definitely resolve the problem. The controversies continued on the effectivity of these clauses on the incident actions. In accordance to a judgment issued in 2017 by the abovementioned Court, the effect of these clauses is limited to principal actions. Consequently, bring the incident actions in court without the fulfillment of these clauses is no longer limited. Taking into account the fact that Iranian Jurisprudence also hesitates in respect of the effects of these clauses, especially where one of the contracting parties bring the case without the fulfillment of these clauses, the study of nature and effects of these clauses in Iranian Law is necessary. In this Article the effect of these clauses on principal and incident litigations would be studied separately.

The French Supreme Administrative Court Provides Useful Clarifications on the Deduction of Government Subsidies from the Cost Base in Applying Cost-Based Transfer Pricing Methods

In a decision dated 19 September 2018 (Philips France SAS), the French Supreme Administrative Court ruled that, in the context of contract R&D services provided by a French taxpayer and charged at cost-plus to a foreign associated enterprise, the deduction of government subsidies from the cost base does not by itself suffice to characterize a transfer of profits abroad. This decision, which is final, as it cannot be appealed, puts an end to the Philips France SAS litigation case that started in 2014 with a contrary decision by a French Administrative Tribunal.It provides useful clarifications on the application of the cost-plus method and clarifies the rules concerning the burden of proof in transfer pricing matters.

Judicial impartiality in politically charged cases

Abstract This paper examines under which institutional and political circumstances tenured public officials make partisan decisions. It analyzes the decisions of the judges from the French supreme administrative court regarding the validity of controverted mayoral elections between 1958 and 2007 and uses the vote differential between winners and losers in each election as a quasi-natural experiment to assess the judges’ impartiality. It appears that the judges became partisan after 1981, when the far-right Front National party started to gain more votes. Before 1981, judges cancelled elections only when the vote differential between the election winner and the closest challenger was small. Afterwards, the affiliation of the parties’ candidates also mattered as judges seldom cancelled elections won by communist, mainstream left-wing and mainstream right-wing politicians.