Section 155A does not apply when the services are performed by an employee

A taxpayer who was a French tax resident and an employee of a Canadian company had been seconded to a French company to provide IT services.

Following a tax audit,administration that the taxpayer should be taxed, pursuant to Article 155 A of the General Tax Code, on the amount paid by the French company to the Canadian company. They also imposed an 80% penalty on the assessment for fraudulent practices.

The taxpayer challenged this assessment all the way to the Administrative Court of Appeals. The Minister, for his part, challenged the Administrative Court’s decision to waive the penalties.

The Court therefore held that the taxpayer was indeed bound by an employment contract with the Canadian company, as evidenced by the pay stubs and a certificate of employment.

The Court finds that the taxpayer’s secondment to another company did not sever the employer-employee relationship and that his duties were indeed performed as an employee and not on a self-employed basis.

administration the taxpayer to be the de facto manager of the French company or its sole partner. The Court, however, held that this does not preclude the taxpayer from being classified as an employee.

The Court therefore ruled that Article 155A of the General Tax Code was not applicable and acquitted the taxpayer.

CAA Nancy, Dec. 4, 2025, No. 24NC00300

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