On 24 November 1994, the Nantes Administrative Court of Appeals decided that when a mother company renounces - to the advantage of its subsidiary - the receipt of income which is normally due, this action should be treated, for corporate tax purposes, as a financial discharge of debt. Under this rule, the renunciation is deductible as long as the financial situation of the subsidiary remains negative and only if the renunciation corresponds to the interest of the mother company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. For additional information contact Claire Acard on 33/(1)/55 61 10 10. The members of Archibald Andersen Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar and the Lyon Bar.