When the Liability of the Certified Public Accountant Undermines the Taxpayer's Defense

A parent company had a credit balance in the accounts of its subsidiary, which had carryforward losses totaling approximately 9 million euros.

The parent company then decided to write off a portion of its operating account equal to the accumulated losses. The profit generated by the subsidiary was offset for tax purposes by the application of those accumulated losses.

Following a tax audit of the subsidiary, the tax authorities (administration ) issued a tax assessment against it, since, for amounts exceeding 1 million euros, losses may be offset against profits only up to 50 percent of the profits.

The reassessment was challenged all the way to the Administrative Court of Appeals. The subsidiary, in challenging the tax assessed against it, argued that the recording of the debt forgiveness was an accounting error that had, in fact, been made without its knowledge by its accountant.

In fact, she had held him liable, which had led to a ruling by the Commercial Court.

The Court then noted that the judgment rendered by the latter indicated that the write-off of the receivable had been recorded by the certified public accountant with the approval of the president of the parent company and that of the subsidiary.

She concluded, therefore, that the subsidiary had not provided evidence that this was an accounting error.

The tax assessment is therefore confirmed.

CAA Marseille, July 15, 2026, No. 25MA00387

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