French Tax Update - Prior Approval of Cross-Border Reorgs, Abusive Sale and Lease-Back Transaction, Official Guidelines on Foreign Tax Credit Limitations, and Noteworthy Recent Case Law

The present French Tax Update provides an overview of several significant publications issued between the end of 2016 and the first months of 2017, including: (i) guidance from the Conseil d'Etat with respect to the definition of a substantial interest under the French participation-exemption regime for capital gains; (ii) the decision of the European Court of Justice on the compliance with EU law of the prior-approval procedure applicable to cross-border reorganizations; (iii) the confirmation by a Lower Administrative Court that a sale and lease-back transaction challenged under the abuse of law theory by the French tax authorities was indeed abusive; (iv) the official guidelines published by the French tax authorities commenting on the limitation rules on foreign tax credits and the recent case law on the treatment of manufactured dividends; (v) an opinion issued by the Committee on Abuse of Law Matters regarding the tax planning of the financing structure of an international group; (vi) a new ruling of the European Court of Justice on the VAT recovery rights of mixed holding companies; and (vii) the publication of the forms to be used in connection with the French country-by-country reporting requirements.

Please contact Emmanuel de La Rochethulon if you are interested in this issue.

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