Certified public accountants engagements cannot be amortized insofar as they can possibly be renewed. In upholding this solution, the Tax Authorities challenge the validity of a late case law of the Administrative Court of Appeal of Paris, which agreed to the amortization of a portfolio of management proxies, acquired by a real estate broker.

According to Article 38 sexies of Appendix III of the French Tax Code, assets which cannot be irreversibly depreciated, especially lands, business intangibles (goodwill), securities cannot be amortized but give rise, if need be, to the booking of provisions under the conditions provided by Article 39-1-5 of the French General Tax Code. The case law considers that an intangible asset has a depreciable nature insofar as, at the time of its creation or acquisition by the company, its positive effects on the operation will end at a foreseeable date. It is not the case for certified public accountants engagements which can possibly be renewed.

For the time being, there exists no definite decision from the courts against this analysis, as the late decision of the Administrative Court of Appeal of Paris accepting the amortization over five years of the management proxies acquired by a real estate broker has been brought to the Supreme Court. Such a development in the case laws would almost certainly lead to amortizing the business intangibles. The consequences of such a solution for the French budget would surely make it necessary to create replacement tax receipts. In addition, it would be contrary to accounting and thus tax principles to take into account a simply uncertain loss by way of an amortization (Rep. Blum, AN September 30, 1996, p. 5169, no.36870).

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