When sparkling wine becomes champagne

A "hostess bar" was subject to a tax audit during whichadministration that its accounting records were insufficient and therefore estimated its profit based primarily on the beverages sold by the business, particularly sparkling wines.

To that end, she noted that the price list mentioned only the sale of champagne, whereas records of sparkling wine purchases showed that the company had purchased, on average, 75% sparkling wine and only 25% champagne.

Since the prices of sparkling wine were lower than those of champagne (even though the company purchased champagne for €8.99 a bottle), the inspector had based her calculations on these two types of sparkling wine.

In its defense, the company attempted to demonstrate before the Administrative Court of Appeal that the method used to reconstruct its revenue was excessively simplistic or fundamentally flawed.

In particular, she criticized the distinction the inspector made between sparkling wine and champagne because, according to the company, "there is no inconsistency in the fact that no sparkling wine is listed on the price menus, given that it is customary to sell this type of wine as champagne in all hostess bars"

However, the court was not persuaded by the argument, and the tax assessment was therefore upheld.

CAA Paris, Sept. 25, 2025, No. 24PA00455

This monitoring service is provided by Mispelon Avocat, a law firm specializing in tax audits and tax litigation. You can stay updated by subscribing to the newsletter via this link.