France Administrative Court of Appeal of Nantes Clarifies Taxation of Compensation Received Under Settlement Agreement

The French Administrative Court of Appeal of Nantes June 9 issued Decision No. 25NT01807, clarifying the taxation of compensation received under a settlement agreement. The taxpayer, a former company executive, sought relief from additional income tax and social security contributions. The tax authorities determined that the payments constituted hidden distributions. On appeal, the Administrative Court of Appeal of Nantes found that: 1) the taxpayer continued to manage and control the business despite formal dismissal from the company, therefore the dismissal was fictitious and the settlement payments qualified as hidden distributions; 2) the taxpayer didn’t qualify for redundancy tax exemptions because ...