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In a decision dated December 11, 2020, the French Administrative Supreme Court overturned a Paris Court of Appeal decision dated March 1, 2018 (which had previously concluded in the absence of a PE under the France-Ireland Tax Treaty) and ruled against the Irish subsidiary ("Irish Co") of a US group. The years at stake were 2009 to 2011. It concluded that the French affiliate of the group ("French Co") should be considered as the dependent agent of Irish Co in France for PE purposes.
Irish Co, a subsidiary of a US group. and sister company of French Co, carried out digital marketing activities in Europe mainly consisting in selling marketing affiliation, media and technology services in these markets.
In France, French Co was remunerated by Irish Co on a cost plus 8% basis for various services including administrative and marketing activities & representation (e.g. identification, prospecting, targeting of clients on the French market, etc.). The contracts with French clients were signed by Irish Co.
The French Administrative Supreme Court ruled that French Co should be regarded as a dependant agent in France of Irish Co, even if it did not formally conclude contracts in the name of Irish Co, since it decided on transactions that Irish Co merely and routinely approved and as such became legally binding to Irish Co.