France: the Nestlé case — a first incursion in the business restructuring arena by the FTA

In its decision dated 11 May 2011, the Administrative Court of Paris ruled that a transfer of a cash pooling activity from a French company managing the cash pool to a foreign entity belonging to the same group without compensation was deemed to be an indirect transfer of benefits on the ground of article 57 of the French Tax Code. The judge confirmed the tax reassessment carried out by the French Tax Authorities (FTA). Even though this case is a first-level court’s decision, and an appeal has been lodged by the taxpayer, it remains an interesting illustration of the recent positions adopted by the FTA regarding cross-border transfers of activities/functions.

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