France: Tax consolidation regime and nonresident subsidiary losses (CJEU referral)

Questions regarding compatibility of French tax laws with EU law

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July 31, 2025

The French Supreme Administrative Court (Conseil d'État) on July 21, 2025, referred to the Court of Justice of the European Union (CJEU) questions in two cases regarding whether the exclusion of nonresident subsidiaries from the French tax consolidation regime is compatible with EU law.

Key questions include whether a resident parent company forming a tax entity with a nonresident subsidiary is comparable to forming one with a resident subsidiary, and whether the inability to offset nonresident subsidiary losses violates the EU freedom of establishment under Article 49 of the Treaty on the Functioning of the European Union (TFEU).

Read a July 2025 report prepared by KPMG’s EU Tax Centre 

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