Inventory write-downs: Discount retailers’ overly modern offers aren’t enough

A furniture retailer underwent a tax audit for the years 2012 through 2014, following which the French Tax Authority (administration ) determined that the allowance for inventory write-downs was not sufficiently justified and could not be fully deducted. It then issued a tax assessment to the company.

The decision was challenged all the way to the Administrative Court of Appeals.

administration . had recognized a 20% inventory write-down, but the company considered this amount insufficient. It argued that the furniture sector was experiencing economic difficulties and that it had closed several stores. It also submitted buyout offers from discount retailers dating from 2019 and 2017 that mentioned a discount ranging from 75% to 95%.

The court will then find that these offers were made several years after the provision was recorded. According to the court, they cannot be used to value the inventory as of the balance sheet date for the fiscal years in which the provision was recorded.

She also notes that the favorable opinion of the departmental commission on direct taxes and sales taxes does not compensate for the lack of supporting documents to justify the amount of the provision.

The tax assessment is therefore confirmed.

CAA Paris, Oct. 2, 2026, No. 24PA00872

This legal watch produced by Mispelon Avocat, a law firm specializing in French tax audit and French tax litigation. You can follow this legal watch subscribing to the newsletter via this link.