When a company succeeds in having a denial of approval overturned

Following a contribution transaction that was subject to the special merger regime, a company wished to distribute the securities it had received in exchange for that contribution to its shareholders, which were a French company and a Dutch company.

To ensure that this allocation is not considered distributed income, it filed an application for approval in accordance with Article 115(2 bis) of the General Tax Code.

This request was denied by the French Tax Authority (administration ) on the grounds that the securities acquired as a result of the contribution were to be allocated to a nonresident company and that this would not “ensure the future taxation of capital gains for which taxation had been deferred pursuant to the requested approval.”

The company then challenged this denial in administrative court, which ruled in its favor. The Minister then appealed the ruling.

The Administrative Court of Appeals then ruled that “the capital gains resulting from the allocation of securities to the Dutch shareholder […] would not be taxable in France in the hands of [that] company, even in the absence of approval.” Thus, the requested tax deferral has neither the purpose nor the effect of preventing the future taxation of the capital gains in question by the Dutch company, as such distributions would, in any event, be taxable only in the Netherlands. Consequently, theadministration was wrong to refuse to grant the requested approval on the grounds that the terms of the transaction did not ensure the future taxation of the capital gains subject to the tax deferral."

The Administrative Court of Appeals has therefore upheld the annulment of the refusal to grant approval.

CAA Paris, July 31, 2026, No. 24PA02947

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