France is transposing the Anti-Tax Avoidance Directive (EU) 2016/1164 (ATAD 1) into domestic law, in particular the general anti-abuse rule (GAAR) and the interest deduction limitation. The specific regime applicable to tax consolidated groups will also be amended to avoid potential violations of EU law.


The French GAAR would be a standard “principal purpose test”. It targets arrangements or series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, are not genuine having regard to all relevant facts and circumstances. However, the broad scope of this provision might be a motive for the French Supreme Court to quash it, as it was the case recently for similar wordings. The outcome of this issue will have to be closely monitored until the vote of the Bill.


Discover more: French Finance Bill for 2019


Authored by: 
Stephanie Hamis
Fabien Drouillard 

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