Extract
[...] Furthermore, the Luxembourg parent company Holdem has also benefited from a reduction of capital of the company Fidem, by reducing the par value of the securities, an operation that released the sum of ?1.9M paid to Holdem. The entire set of these distribution operations was not imposed in France, as Fidem company estimated to be exempt from tax according to the terms of art third of the CGI providing an exemption in favor of intra-European distributions. Then, for in the end to reach their real beneficiaries, the two brothers, the company she has granted them loans of up to ?1.2M each. [...]
[...] them directly as a natural person). The third party would have only generated a low profit, due to the importance of inheritance taxes (1.9 which have increased the cost of the shares. Alternatively, they argued that they could also have seized the cash of the French company Fidem via a buyback of their shares by this company followed by their cancellation. But this money paid by the company to the shareholders would not have been taxed either because no taxable income would have been generated according to article 161 of the CGI, which states that only the surpluses of reimbursement of the rights purchased at a price higher than the acquisition price are taxable. [...]
[...] The taxpayer appealed this judgment before the Administrative Court of Appeal of Lyon, which also rejected his request. He therefore lodges a cassation appeal before the Council of State against this ruling. In its arguments, the taxpayer invoked, inter alia, that his arrangement had, indeed, been qualified as an abuse of law by the tax administration, but that there were, in any case, procedures provided for by national texts that allowed achieving the same result. It was therefore in these terms that the question of law was posed to the Council of State. [...]
[...] Thus, at the end of these operations, each of the two brothers had apprehended a sum of approximately ?3.2M. It is now necessary to focus on the legal qualification that was conferred on this tax structure by the administration. B. A structure falling within the qualification of abuse of law The administration considered that such a structure had been designed by taxpayers (or their advisors) solely for the purpose of apprehending the distributions carried out by the French parent company, Fidem, in tax franchise. [...]
[...] In the end, the applicants requested the judge to accept substituting ab initio, to take up the term of the rapporteuse publique, they put in place a different legal structure, corresponding to the case at hand, either the liquidation of the French company or the purchase of its shares followed by a reduction in capital. However, the Council of State refused to open a breach that would prove too favorable to the taxpayer, and did not rule out the theory of abuse of law for this reason. B. The general recall of the conditions of abuse of law This decision of the Council of State is also an opportunity to recall the position of the High Jurisdiction on the conditions for the recognition of abuse of law. [...]
