Tax Treaty Case Law around the Globe 2013

S. 261 France: The Paupardin Case

Philippe Martin

1. S. 263 Introduction

The Paupardin case was decided by the French Conseil d’Etat on 16 April 2012. It deals with the taxation – under French income tax – of wages earned by a French resident employed as a captain on ships operated in international traffic. At issue was the application of Article 15(3) of the France-New Zealand DTC of 30 November 1979, which lays down the same rule as Article 15(3) of the OECD MC. In Paupardin, the Conseil d’Etat interpreted, for the first time in its case law, the notion of “place of effective management”.

The decision was rendered on a type of appeal called cassation, whereby the supreme court performs a legal review mainly on points of law. The case was initially handled by a first instance administrative court, then by an administrative court of appeals, before the final appeal to the Conseil d’Etat. The latter court takes a rather wide view of legal review, because it examines not only points of law, but also the legal qualification of facts and the appreciation of facts in case of alleged gross distortion of the facts. But the Conseil d’Etat does not directly judge the facts, it judges the decision rendere...