The major French banks have just won a round in the standoff that has pitted them for years against the tax authorities over the evasion of tax on dividends. Through their lobby, the French Banking Federation (FBF), they obtained, on Friday December 8, a favorable decision before the Council of State, which weakens the position of the tax authorities in this multi-billion euro issue.
Half a dozen banks – including Société Générale, BNP Paribas, Natixis (BPCE group) and Crédit Agricole – have been in Bercy’s sights since 2017 for practices called “CumCum”, including The world revealed the existence in 2018 as part of an international investigation. They are accused of having allowed their foreign clients to escape tax withholding on dividends thanks to rapid round-trip transactions of stock market shares between abroad and France, subtracting billions of dollars each year. euros of revenue to public finances.
If the fraudulent objective of “CumCum” is hardly in doubt, a legal debate is raging to know whether French law clearly allows these tax fraud schemes to be condemned, carried out by means of classic stock market operations and at first sight legal in the specialized services of investment banks. Parliament having failed to effectively prohibit these practices – the legislative reform carried out in this regard in 2018 was torpedoed by the Macronist majority and the government – the tax administration has found itself juggling ambiguous legislation. To clarify the situation, she published, in February, three interpretative notes clearly placing these operations outside the scope of legality.
Weakened tax adjustments
Contesting this position deemed too restrictive and concerned about an obstacle to market activities “detrimental for the Paris market”the FBF contested these three texts before the Council of State to “excess of power”. The supreme administrative court therefore agreed with him, considering that the tax authorities had overinterpreted the law.
If it were a question of deciding a question of principle, the case law established by the Council of State will have very concrete implications. The administration had in fact completed tax adjustments against six separate banks, which could bring 2.5 billion euros into the state coffers, according to the latest estimate. communicated by the government in the spring. The legal bases for some of these cases are now weakened.
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