Deemed distributed income: simply designating a beneficiary is not sufficient proof

A company underwent a tax audit during whichadministration rejected its accounting records and recalculated its revenue. The authorities then determined that certain profits had not been taxed and that these profits constituted deemed distributed income.

She asked the company to identify the recipients of this deemed distributed income, as provided for in Section 117 of the General Tax Code.

The company initially responded with a letter signed by its manager stating that the company’s partners were the beneficiaries. The company’s attorney then sent another letter reiterating that the four partners were the beneficiaries and specifying the amounts seized.

The manager's wife, who was a shareholder, was subsequently issued a tax assessment for this deemed distributed income.

The decision was challenged before the Administrative Court of Appeals, which ruled thatadministration must provide evidence that the taxpayer received the deemed distributed income.

It considers that, with regard to the manager’s wife, a simple letter sent by a lawyer who does not represent her—stating that she would be the recipient of deemed distributed income—is not sufficient to prove that she received such income.

The Court therefore overturns the tax assessment in this regard.

CAA Paris, July 17, 2025, No. 23PA04317

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