Are legal fees paid by a foreign company in connection with a dispute over the 3% tax deductible in France?

A Belgian company had purchased a villa in France in 1998. Following a tax audit,administration a tax assessment to the company.

She believed that the company had waived the collection of rent because the villa had been made available to the company’s partners, but also that it had improperly deducted bailiff and attorney fees.

Before the Administrative Court of Appeals, which was hearing the case, a debate took place regarding the method for determining the rental value of the villa, and the court ruled in favor ofadministration.

It should be noted that, in an effort to substantiate its claim,administration , among other things, contacted 11 real estate agencies, requesting copies of lease agreements for villas located in the same neighborhood or in neighborhoods adjacent to the villa owned by the company. It received only one response to these requests.

The Administrative Court of Appeal also ruled that the fees paid to bailiffs and attorneys in connection with a dispute over the annual tax of 3% of the market value of the properties could not be linked to the company’s operation of the real estate in France.

She notes that the latter does not have a permanent establishment in France and that this expense is therefore attributable to its headquarters in Belgium.

The Court thus confirms the company's reorganization.

CAA Marseille, March 27, 2026, No. 24MA00244

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