Is the failure to pass on restructuring costs to group companies an irregular management practice?

A French company indirectly owned by an Italian company operated a manufacturing plant. As part of a group restructuring, the plant was closed. Following this closure, the company was subject to a tax audit, andadministration that it had committed an irregular management act by failing to bill the group companies for the costs of closing the site.

In particular,administration that:

• The decision to restructure had been made by the Italian company

• "The restructuring had primarily benefited the other overseas subsidiaries from which the [French company] had to source supplies due to a lack of its own production capacity"

The Administrative Court of Appeal will, however, rule that "administration, which was not required to rule on the appropriateness of the decision to close the site in question, […] does not cite any legal obligation to allocate the restructuring costs to the group's other foreign subsidiaries."

She points out thatadministration couldadministration conclude that the transaction was contrary to the interests of the French company solely because the closure of the plant benefited the other companies in the group.

Finally, the Court notes that, in any event, the company provided evidence of the benefit it derived from the transaction because:

• had the site not been closed, the company would have fallen into the red in the near future;

• the sale price of the site covered the extraordinary costs associated with its closure;

• The company has seen a significant reduction in its production costs.

The tax assessment is therefore rescinded.

CAA Lyon, Jan. 15, 2026, No. 24LY02534

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