SASU and Income Tax: Did the Ministry’s Response Really Repeal the BOFiP?

In the context of litigation concerning SASUs subject to income tax and the application of social security contributions to capital income, one of the arguments available to taxpayers is to challenge the interpretation provided by theadministration in its BOFiP (BOI-IS-CHAMP-20-20-20-20, No. 260). The administration has in fact stated that, in the case of professional activity carried out within the company, social security contributions apply rather than social levies.

Since the Minister put forward a different interpretation of the texts in the ministerial response dated June 2, the question of the validity of the interpretation set forth in the BOFiP may arise in the coming years.

The Conseil d'Etat has, in fact, held in previous decisions that a ministerial response could alter the doctrine of tax “administration ” that is enforceable by the taxpayer.

However, it is important not to focus solely on the scope of the decision, but rather to examine the reasoning behind the ruling in the case of Conseil d'Etat.

As stated by the Conseil d'Etat in its decision of July 4, 1986 (CE, Plenary Session on Tax Matters, July 4, 1986, No. 47410, Published), an administrative interpretation of tax law that differs from a previous interpretation may be “enforced against taxpayers only as of the date on which it was publicized to an extent at least equivalent to that given to the previously accepted interpretation.”

At the time, the Council of State ( Conseil d'Etat ) had acknowledged that the publication of a ministerial response in the JOAN was equivalent to the publication of administrative doctrine in the BODGI (see the conclusions in CE, Tax Plenary Session, March 18, 1988, No. 73693, Lebon).

Since those decisions, however, the procedures for publishing administrative doctrine have changed.

From now on, this information is expected to be published on a website, the BOFiP, which also lists the validity dates for the interpretations mentioned.

Above all, the Conseil d'Etat itself acknowledged that the publicity given to administrative instructions had changed. It found that, since the creation of the BOFiP database, the publicity given to it has been greater than that given to previous administrative instructions, and it amended the starting point of the appeal period (CE, Sect., March 13, 2020, No. 435634, Published).

With regard to the ministerial responses, he continues to believe that publication in the JOAN is not, in and of itself, sufficient to trigger the start of the appeal period.

Thus, it would appear that the publication of a ministerial response is no longer equivalent to that of an administrative directive. If that were the case, it would mean that the BOFiP is still in effect and would remain enforceable for years to come.

There is a dedicated page on our firm’s website addressing disputes regarding SASUs and income tax, which covers the various issues involved. If you’d like to access it, click here.