The absence of business dealings with subsidiaries does not allow one to presume that the waiver of a debt is of a financial nature

A company underwent a tax audit, following whichadministration its provisions for bad debt.

The company had, in fact, granted loans to subsidiaries in 2004 and 2005 at interest rates ranging from 8% to 10%. The receivables from these companies were written down in 2014, 2015, and 2016.

administration took the view that, since the company had no business dealings with these subsidiaries, any debt forgiveness would necessarily be of a financial nature and would not be deductible. The provision was also not deductible.

The Administrative Court of Appeals will then rule that this factor alone is insufficient to conclude that any future debt forgiveness would be of a financial nature.

It also holds that a recapitalization in which the company granted a financial waiver does not establish that the debt waiver will have a financial nature in the future.

The tax assessment on this point is therefore rescinded.

CAA Marseille, Nov. 6, 2025, No. 24MA00881

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