When a judge denies an exemption from capital gains tax on real estate due to a termination agreement for an employment contract

A taxpayer sold an apartment, paid the capital gains tax on the profit realized, and then filed a claim requesting a refund of that tax.

He believed he was entitled to the tax exemption provided for in cases of reinvestment to purchase a primary residence within two years of the transfer of the proceeds from the sale, and more specifically to the legal doctrine stating that the reinvestment requirement does not apply when the taxpayer or his or her spouse“is subject [during this two-year period] to termination of their employment contract at the employer’s initiative. This includes employees who have been laid off or retired.”

After his claim was denied, the taxpayer appealed the decision through the courts all the way to the Administrative Court of Appeals.

The court will first note that the legal requirements for the exemption were not met, since the funds had not been reinvested within two years.

The court then found that the taxpayer had indeed lost his job and examined the agreement with his employer that led to the termination of his contract, noting that this agreement stipulates that“the employee reaffirms his intention to leave voluntarily as part of the job preservation plan / voluntary departure plan in order to start or take over a business” and that “the signing of this agreement constitutes a termination by mutual agreement of the employment contract between the employee and the company.”

The Court concluded that the taxpayer's employment contract had not been terminated at the employer's initiative and that the taxpayer could not rely on the administrative doctrine.

It should be noted, in passing, that an administrative doctrine is, in principle, not enforceable in the context of an administrative appeal.

CAA Versailles, Oct. 15, 2026, No. 24VE00580

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