Proving the existence of undisclosed payments requires establishing that the amounts were not properly recorded

A couple purchased a property in Paris, financing the purchase with loans from a French bank and a Tunisian bank. The latter loan was denominated in Tunisian dinars.

Because Tunisia’s foreign exchange controls prevented the loan amount from being transferred to France, the couple cashed checks in euros and, in return, paid the equivalent amount in Tunisian dinars to the two executives of the company.

Following a tax audit of the couple,administration that this income should be classified as undeclared income and issued a tax assessment to that effect to the couple.

The reassessment was challenged all the way to the Administrative Court of Appeals. The court noted thatadministration evidence that the checks made out to the couples had not been properly recorded in the company’s books.

In the absence of such evidence, it is therefore not possible to conclude that the amounts received constitute hidden compensation.

The tax assessment is therefore rescinded.

CAA Paris, May 18, 2026, No. 25PA06585

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