What is the current status of the QPFC claim?

In recent years, the Council of State has issued several decisions that open up possibilities for companies to potentially claim tax credits against the share of expenses and charges (“QPFC”) or a refund thereof (Council of State, 8th and 3rd Chambers, Nov. 15, 2021, No. 454105, Cited in the tables, L’Air Liquide; CE, 8th and 3rd Ch., July 5, 2022, No. 463021, Cited in the tables, Axa; CE, 9th and 10th Ch., April 7, 2023, No. 462709, Cited in the tables, A. Raymond et Cie, or more recently in connection with the tax treaty between France and Chile: CE, 8th and 3rd Ch., Feb. 18, 2025, No. 490792, Cited in the tables, Legrand).

This applies both to the QPFC tax on dividends received by French companies from their foreign subsidiaries that benefit from the parent-subsidiary regime and to capital gains realized on the sale of their subsidiaries’ equity interests.

In practice, to obtain a refund, it is necessary, among other things, to provide evidence of the amount of expenses incurred by the holding company in collecting the dividends distributed by its subsidiary.

This justification currently poses serious challenges for businesses, as illustrated by two rulings handed down by administrative courts of appeal:

• For example, the Paris Administrative Court of Appeal held that a company cannot simply provide a list detailing the expenses incurred and their amounts to prove that such expenses were actually incurred (CAA Paris, Oct. 11, 2023, No. 21PA05034).

• The Lyon Administrative Court of Appeal, for its part, held that merely submitting a statement from the chief financial officer indicating that the holding company incurred no expenses in managing its equity investments is also insufficient to prove that no expenses were actually incurred (CAA Lyon, Feb. 6, 2025, No. 23LY01233).

Other lawsuits have been filed by companies in the courts and may eventually shed further light not only on the expenses to be taken into account but also on the evidence taxpayers must provide to obtain a refund of the QPFC.

In any event, in the event of an appeal, it is important to ensure that the evidence submitted to substantiate the actual costs is as comprehensive as possible.

While this evidence may be submitted until the conclusion of the proceedings before the Administrative Court of Appeal, it is advisable to document the relevant information as soon as possible to avoid potential difficulties in the future should there be changes in the company’s service providers or workforce.

If you would like to discuss these topics, please feel free to contact us.