Tax Treaty Case Law around the Globe 2015
1. Aufl. 2016
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S. 91France: Société DGFP Zeta
Emmanuelle Cortot-Boucher
I. S. 92Introduction
The Société DGFP Zeta decision was rendered on 12 March 2014 by the Conseil d’Etat, which is the French supreme administrative court. It tackles the issue of how exchange gains should be considered in terms of the application of tax treaty provisions when they are made through the sale of buildings.
II. Facts
The dispute brought to the Conseil d’Etat involved a French company which had bought a building in Japan and sold it in 1996. At the time of that disposal, the French company had made a gain directly related to the value of the building, but also a gain related to the variation of the rate of the Yen in French Francs.
The company considered that this gain was not liable to the French profit tax, but the French tax authorities took the opposite view.
The French company brought the case before the relevant court of first instance, and then to the second instance court. Both of these courts ruled against the company and said that the French tax authorities were right.
Both courts considered, indeed, that the exchange gain made by the French company fell under the provisions of Article 7 of the France-Japan Tax Treaty of