Tax Treaty Case Law around the Globe 2021

S. 72I. Introduction

The judgment released by the French Supreme Administrative Court (Conseil d’Etat, hereafter referred to as Supreme Court) in the “Conversant” case is particularly interesting as it provides that a non-resident company performing digital services has a permanent establishment in France under an “old-type” model of the tax treaty. It clearly shows, as the “public rapporteur” (a French equivalent for the advocate general) noted in his opinion, that “the plasticity of […] traditional law is perhaps greater than has been commonly accepted to date”.

II. Facts of the Case

An Irish company called Valueclick International Ltd (now Conversant International Ltd) was wholly owned by a company incorporated in the United States at the time called Valueclick Inc. It carried out a digital marketing activity, in particular in Europe, through the intermediary of sister companies and, in particular, in France, through the intermediary of the société à responsabilité limitée (SARL) then called Valueclick France (hereafter “the French company”). The Irish company offered its clients services called “Media”, “Affiliate Marketing”, and “Technologies”.

In execution of a service contract betwee...