Coverage of subsidiaries' expenses by the holding company: penalty overturned byadministration

A holding company with holdings in, among other things, a rugby club had deducted from its financial statements image rights fees and expenses charged by rugby players for participating in promotional events.

Following an audit,administration determined that these expenses constituted an irregular business practice and that the holding company should not have deducted them from its income.

This reassessment was challenged all the way to the Administrative Court of Appeals.

The holding company attempted to argue that these expenses had been incurred "inthe normal course of its activities as a holding company" and that they had helped enhance the image of the group as a whole, beyond its sports subsidiaries.

The Court will note, however, that the holding company did not "specify the expenses that would have contributed directly, or even indirectly, to the reputation and image of the group as a whole, nor did it establish the nature and extent of that contribution."

The court further found that the events in which the rugby players participated were all organized by subsidiaries of the holdingcompany. The court also noted that "only a brochure presenting the [holding company's] group includes a photograph of a few players."

It therefore concluded that it was not possible to establish a link between the company's operations and the expenses.

The holding company's recovery is therefore confirmed.

CAA Paris, Feb. 25, 2026, No. 24PA03158

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