Law & Numbers - News Tax

Tax deferral and abuse of law

30.03.2011 (France)

In its decision dated February 11, 2011, the Supreme Administrative Court ruled that the tax deferral benefitting to a taxpayer for the contribution of his shares to a company he controls, immediately followed by their disposal by the latter company, does characterize an abuse of law only if the sole purpose of the scheme enables the taxpayer, by interposing a company, to receive the cash derived from the sale of these shares, while remaining holder of shares received in exchange (CE 02.11.2011, 314950).

However, should the proceeds derived from the sale of the shares be effectively reinvested into an operational activity, such a scheme does not fall within the scope of abuse of law transactions.

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