Debt-Push-Down Challenged Under Abuse Of Law Theory

In a decision issued few weeks ago (CAA Versailles, April 14, 2015, SAS Ingram Micro), the Versailles Administrative Court of Appeals (CAA) took position on a debt-push-down financing which has been challenged by the French tax authorities, as from 2008, under the abuse of law theory (abus de droit). Such financing has already been reviewed by the advisory committee in charge of abuse of law matters (Comité de l'abus de droit fiscal, CADF) in 2010 and by the lower court in 2012 (TA Montreuil, March 15, 2012, n°10098952).

The main facts were the following:  

• In September 2004, the shares of the French subsidiary (FCo) were transferred by its US shareholder (USCo 1) to a related US company (USCo 2), and then on-transferred by USCo 2 to another related US company (USCo 3), both transfers being presumably financed through vendor loans.