Systematic trade discounts: beware of tax risks

A company had provided a number of services to third-party companies that were members of an informal family group.

The contract provided for specific terms of payment. A subsequent amendment to the contract stipulated that the company could, "as needed and on a commercial basis, grant a discount on administrative fees of up to 60% of the amounts due."

Following a tax audit,administration the discounts granted under this amendment. They noted that the company granted, on a flat-rate basis, an annual credit equal to 50% of the invoiced amount.

administration that "the percentage of assets allocated remains the same each year, with no variation between fiscal years or companies and no distinction based on the financial situation of each company."

The company sought to argue that these commercial discounts were not disproportionate to the revenue generated.

The Administrative Court of Appeal will, however, rule that the profit margins claimed by the company were not properly justified.

The company also argued that the companies' financial situation justified these discounts.

The Court will, however, find that the company has not demonstrated that these commercial discounts were justified by a customer loyalty policy and that the company received consideration in exchange for these discounts.

The Court therefore upholds the assessment.

CAA Versailles, Dec. 18, 2025, No. 23VE01740

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