Order of deficit allocation: Will documentation be required?
In a ruling dated March 1 of this year, the Paris Administrative Court of Appeal held that, in the absence of evidence demonstrating the order in which a company allocated its losses,administration free to determine the order of allocation as they see fit.
In this case, a company with a carryforward of losses incurred between 2006 and 2009 argued that the losses incurred between 2006 and 2008 had been carried forward to the 2010–2012 tax years.administration therefore no longer entitled to assess the company for additional taxes, since the statute of limitations for the 2012 tax year had expired.
By placing the burden of proof regarding the allocation order on the company—which, according to the Court, it would not have been able to meet—the judges held that since there was still an accumulated deficit at the beginning of fiscal year 2013,administration entitled to challenge it, on the grounds that the losses they are challenging could have been incurred across all the fiscal years in which losses were reported (including 2006 and 2007 in this case) as long as the accumulated deficit has not been fully utilized by the company.