Tax Summary Proceedings: Clarifications on Valid Security in Cases of Payment Deferral

An individual received a tax assessment notice fromadministration wished to contest it. He then filed a formal appeal along with a request for a stay of payment.

In accordance with Article L.277 of the Code of Tax Procedures, the public accountant then asked him to propose the safeguards he could put in place so that the public accountant could ensure the collection of the tax assessment.

The individual then proposed a mortgage on real estate owned by an SCI.

However, the accountant refused to provide this guarantee, and the taxpayer then filed a tax appeal (Section 279 of the Tax Procedure Code) with the Administrative Court to challenge this refusal.

The Lyon Administrative Court of Appeal first clarifies that the Treasury may not register a mortgage on real property owned by another person unless that person is also jointly and severally liable for the tax debt. This joint and several liability may be established by a surety agreement.

It further states that, in the absence of such a surety bond, the tax official is entitled to reject the security offered by the taxpayer. The Court also clarifies that if the security offered by a general partnership could jeopardize the very existence of the partnership, it is invalid.

The court therefore ruled that the accountant was entitled to refuse the proposed guarantee because it was the only asset held by the SCI.

She notes, however, that following the offer of collateral, the liquidation of the SCI resulted in the transfer of ownership of the building to the individual. The Treasury was therefore now able to register a mortgage on the property that had initially been offered as collateral.

The Court also notes that the subsidiary guarantee offered by the individual, consisting of shares in a SASU, could not be accepted as collateral because“securities not listed on a French stock exchange may be accepted as collateral only if accompanied by a bank guarantee ensuring full payment of the taxes due, in the event that, in the event of a subsequent sale of the securities for the purpose of settling the tax debt, the price obtained would prove to be less than the amount of the guaranteed taxes.”

CAA Lyon, April 22, 2025, No. 25LY00104

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