OD FLASH | Decisive clarification of case law on the exercise of executive functions

Paris Administrative Court of Appeal, 11 April 2025, No. 23PA02576

In a ruling dated 11 April 2025, the Paris Administrative Court of Appeal reiterated that the personal choice of a corporate officer to reside abroad while remotely managing a company established in France is not sufficient to consider that their functions are effectively performed in the country of residence. The Court also dismissed the application of the tax credit provided for under the France-United Kingdom tax treaty, due to the taxpayer’s failure to prove effective taxation in the United Kingdom.

In this case, the taxpayer, described by the public rapporteur Mr. Sibilli as a “top executive”, was the Chairman and CEO of a French group. He had moved to the United Kingdom for family reasons while maintaining his tax residence in France. He claimed to have spent more than 183 days per year in London during the years in question. On this basis, he requested the application of Article 15 of the France-United Kingdom tax treaty dated 19 June 2008, which provides that employment income is taxable in the country where the activity is performed, in this case, the United Kingdom.

He also sought the benefit of Article 24 of the same treaty in order to avoid double taxation on the income earned in connection with his functions.

In support of his position, the taxpayer relied not only on his habitual stay in London and the taxation of his professional income there, but also on the use of a professional office in the United Kingdom made available by the company.

The Paris Administrative Court[1] dismissed his claim, holding that the activity had in fact been carried out fully and entirely from France, the location of the group’s headquarters and the place where the executive functions were effectively exercised.

The Paris Administrative Court of Appeal upheld this judgment, relying on a presumption that the activity was carried out in France. The Court first noted that the company’s effective place of management was in France, where strategic decisions were taken and where the operational teams were also based.

The Court further emphasized that the taxpayer had maintained affiliation with the French social security system and that his payslips indicated a French address, as did various documents issued by the company.

Lastly, the Court noted that the taxpayer had publicly stated that his move to London was for personal reasons unrelated to his professional activity.

In light of these factors, the Court held that the taxpayer’s professional activity could not be considered to have been performed anywhere other than in France, and that the remuneration in question was therefore fully taxable in France. On this basis, the Court dismissed the application of the tax credit.

In this ruling, the Paris Administrative Court of Appeal based its reasoning on the location of the company’s decision-making center, which is not necessarily identical to the executive’s place of residence.

This decision provides a decisive clarification on the concept of the place where the employment is exercised within the meaning of tax treaties consistent with the OECD Model Convention.

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[1] Paris Administrative Court, 12 April 12023, No. 2103312