No deemed distribution of income in the case of a sale at a reduced price accompanied by a seller’s credit

Following the failure of an industrial project, the shareholders decided to sell the company’s shares. The CEO then purchased a portion of the shares and sold them on the same day, at the same price, to an individual who had agreed to take on a leadership role within the company.

The new manager was unable to take out a bank loan to purchase these securities. The transfer of the securities to him was therefore accompanied by a vendor loan from the CEO to him.

Following a tax audit,administration determined that the sale had been made at an undervalued price and issued a tax assessment to the CEO, finding that he had received deemed income distributed by the company that sold the securities.

The Conseil d'Etat rule that, contrary to theadministration assessment, the two share purchases (first by the CEO, then by the new manager) should be considered a single share purchase by the new manager.

He therefore believes that the CEO acted solely as a lender in this transaction and that, consequently:

• administration couldadministration conclude that the intention had been to grant it a concession that would preclude the application of Article 111(c) of the General Tax Code;

• He did not include the amounts in question, thereby excluding the application of Article 109(1)(1) of the General Tax Code.

The tax assessment is therefore rescinded.

EC, 9th and 10th Chambers, Oct. 8, 2025, No. 496738

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