Decisions of the Court of Cassation dated April 4, 2024

Yesterday, the Court of Cassation issued two interesting rulings concerning (i) international assistance in debt collection and (ii) tax liabilities included in the liabilities section of the wealth tax return in cases where such liabilities are disputed.

In the first case, a taxpayer had received tax benefits in the United Kingdom in 2004 and 2005 that were subsequently challenged by a 2014 English law. The United Kingdom had requested that France recover the amounts in question pursuant to the Directive on mutual assistance in the recovery of claims.

The Court of Appeals had ordered the lifting of the injunction, ruling that the retroactive British law had violated French public policy.

The Court of Cassation overturned the ruling, holding that neither the ECHR nor the Charter of Rights "establish the non-retroactivity of a non-penal tax law as a matter of public policy, nor does the Constitutional Council recognize it as having constitutional value." It held that this ground alone cannot justify a refusal to proceed with collection.

Court of Cassation, Commercial Division, April 4, 2024, No. 21-10.579, Published

With regard to the second ruling, the Court states that "a debt established following a tax reassessment procedure may be considered uncertain only as of the date on which it is challenged and, consequently, may not be included among the deductible liabilities for purposes of calculating the wealth tax base"

The Court thus overturned the appellate ruling, which had held that the challenge to the debt had retroactive effect and that the debt could not be deducted from the wealth tax until the challenge was resolved. Yesterday’s ruling expressly states that“a debt that, as of January 1 of the tax year, was not the subject of any dispute, is deductible from the wealth tax base [...] even if that debt becomes the subject of a subsequent dispute.”

Court of Cassation, Commercial Division, April 4, 2024, No. 22-19.335, Published