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Council of State, 9e cham., 02/12/2026, 500842
Since the “Collectivision” ruling handed down by the Council of State on October 4, 2023, administrative case law relating to management fee agreements has evolved in a direction more favorable to taxpayers, marking a break with the solution resulting from the “SA Gamlor” ruling of the CAA of Nancy (October 9, 2003), which led to the almost systematic rejection of the deductibility of fees when management services were indistinguishable from the functions inherent in the corporate office.
From now on, the conclusion of such an agreement does not in itself constitute an abnormal management act, provided that the company genuinely intended to remunerate its manager indirectly.
In this case, a company had entered into service agreements with two companies owned by its own managers, substituting the payment of fees to these structures for their direct remuneration. The tax authorities challenged the deductibility of these amounts for corporate income tax and VAT purposes, citing an abnormal management act.
Although the Paris Administrative Court of Appeal had validated the deduction on the grounds that the amounts corresponded to former salaries, the Council of State censured this approach.
While it points out that the absence of direct remuneration during a financial year does not constitute an irrevocable management decision preventing subsequent remuneration (which may be retroactive or indirect), it imposes an essential formal condition.
Deductibility is only granted if the company establishes that its competent corporate bodies actually intended, through the payment of these fees, to indirectly remunerate the manager.
The mere finding of financial equivalence, i.e., that the amount of the fees corresponded to former salaries, cannot compensate for the lack of proof of corporate intent.
The case has been referred to the Paris Administrative Court of Appeal.
