The 25% surcharge on deemed distributed income applies to the recipient only in the event of a tax reassessment of the corporation

A company underwent a tax audit that resulted in no tax assessment.

However, during this audit,administration found that withdrawals had been made from the company's checking account.

administration then determined that these withdrawals constituted deemed distributed income for the company’s partner and increased this income by 25% pursuant to Article 158(7) of the General Tax Code.

The Court, while upholding the reassessment, will nevertheless set aside the application of the 25% income surcharge. It notes that the application of this surcharge requires that the deemed distributed income result from a reassessment of the company. In the absence of such a reassessment in this particular case, the surcharge does not apply.

CAA Bordeaux, July 11, 2025, No. 23BX01257

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