An entity may record provisions in order to face the loss of sums the debtor of which lives in a country in which foreign currencies transfers abroad are controlled, insofar as it can prove that it has been prevented from repatriating in France at the closing of the tax year whole or part of these sums and that the company did not make the management decision either to spend or invest them there at the same time, or to perform an operation allowing to have indirectly the disposal of these sums in a convertible currency before the opening of the following tax year. These provisions must be related to the income of this tax year or the following tax years during which this repatriation, this expense, investment or income aimed at by this operation will have been performed or obtained.

In the present case, the entity the main activity of which was the manufacture and distribution of perfumes and cosmetics had granted by way of an agreement, operating licences of some of its products to a Malagasy and a Moroccan company which had in return to pay royalties calculated in percentage of their turnovers. Following the blocking measures of cash transfers abroad taken by the authorities of these countries, the company had recorded provisions in order to face the loss of its receivables. By refusing the deduction of these provisions arguing that the company, as it had not been able to obtain the transfer of its cash in France, could not however prove that it had not been able to use these sums there, the Administrative Court of Appeal of Nantes applied inaccurately article 39-1-5 of the French General Tax Code (CE, December 6, 1996, no 149923, 8e and 9e s.s., Societe L'Or‚al; RJF I/97, no.9).

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