There are five principal sources of tax law in France: treaties,

2.European Union Law

3.laws and decrees, law, and

5.administrative interpretations.


France has entered into approximately ninety bilateral treaties to limit double taxation; the renegotiation of such treaties and the negotiation of new treaties are continuing. 3  Subject to their approval by the Parliament, ratification by the President of the Republic and due implementation by the other signatory countries thereof, 4  such treaties prevail over domestic French legislation.


The EC Treaty  has an authority superior to that of French national legislation. Consequently, French tax laws and decrees must comply with the EC Treatys general principles, notably those of non-discrimination between EU residents and the free circulation of persons, goods, services and capital between the Member States. National judges may directly, or after consulting with the Court of Justice of the European Communities (CJCE), strike down French tax legislation which conflicts with the EC Treaty. This rule applies even where the French legislation was passed subsequent to the EC Treaty. 

French tax laws must, therefore, be compatible with EC directives and regulations. It is to be noted that EC directives are binding and directly applicable in France either upon their incorporation into French legislation or as soon as the deadline for incorporation has passed. Even where the principles of an EC directive have not been incorporated into French legislation, however, the CJCE has held that national judges must set aside (French tax) provisions which are incompatible with the clear and precise language of such an EC directive. The French Conseil dEtat has also so held in cases involving decrees. Moreover, the French courts may examine the compatibility of French law with the objectives contained in a previously-adopted EC directive and the Conseil dEtat has recognized the liability of the French State in such cases. 

The principal directives in the tax area are the following:

* Directive No. 2006/112/EC of November 28, 2006, O.J. No. L.347/1 on VAT;

* Directive No. 69/335/EEC of July 17, 1969, O.J. No. L.249/25 on contribution taxes;

* Directive No. 90/434/EEC of July 23, 1990, O.J. No. L.225/1 on the tax treatment of mergers, spin-offs, partial spin-offs and exchanges of shares between companies of two or more Member States;

* Directive No. 90/435/EEC of July 23, 1990, O.J. No. L.225/6 on the tax rules applicable to parent companies and subsidiaries of different Member States;

* Directive No. 2003/48/EC of June 3, 2003, O.J. No. L.157/38 on taxation of savings income in the form of interest payments;

* Directive No. 2003/49/EC of June 3, 2003, O.J. No. L.157/49 on a common system of taxation applicable to interest and royalty payments made between associated companies of different member states.


Explicit provision is made in the Constitution of France that only the Parliament has the right to enact laws fixing the rules relating to the basis, rate and methods of collecting taxes of all kinds. The rule-making power of the Government in the area of tax law is limited to the issuance of implementing decrees. The separation of powers as between the Parliament and the Government is assured through the power of review vested in the Constitutional Council (Conseil Constitutionnel) prior to the promulgation and in the administrative courts subsequent to the promulgation of rules of law. The only exceptions to this grant of exclusive legislative authority to the Parliament are the ability of the Government to ask the Parliament for authorization to promulgate ordinances creative of tax law and the power reserved to regional and municipal jurisdictions to assess local taxes.

The Constitution further provides that each year the Government must submit a finance bill (projet de loi de finances) to the Assemblée Nationale in which is set forth the nature, amount and allocation of the resources and expenses of the State for the next calendar year. The finance bill must specifically grant to the Government the authority to collect taxes; if the finance bill has not been submitted at such a time as to permit its enactment before the beginning of a calendar year, the Government must request from Parliament authorization to levy taxes and must appropriate by decree the funds needed to meet existing governmental commitments. The power of the Government to propose tax or budgetary legislation is not, however, exclusive; additional bills and amendments to the finance bill may be enacted by Parliament if the adoption thereof would not result in either a diminution of public revenues or in an increase of public expenditures not covered by appropriate sources of revenue and if such amendments are accepted by the Government. Once adopted, the finance act (loi de finance), which is tantamount to the annual budget of France, may only be amended during the course of the year by a special amending act (loi de finance rectificative).

The tax laws and ordinances enacted by Parliament or adopted by the Government are codified in a unified Code général des impôts which is regularly updated; implementing decrees are contained in the four annexes to said code and procedural rules are set forth in the Livre des procédures fiscales.


The interpretation of tax laws issued either by the Conseil dEtat, which has jurisdiction over questions related to, inter alia, income tax and value added tax, or the Cour de Cassation, which has jurisdiction over questions related to registration taxes, indirect taxes and wealth taxes, are given great weight. In addition to its power to resolve disputes arising out of the application of tax law, the Conseil d’Etat gives advisory opinions upon draft tax decrees or laws prepared by the Government


The manner in which tax laws and ordinances, or the decrees issued pursuant thereto are to be interpreted may be set forth in administrative interpretations issued from time to time by the General Tax Divisions of the Ministry of Economy (Direction Générale des Impôts). Such administrative interpretations are issued in the form of notes, instructions or circulars and most are periodically published in the Bulletin Officiel des Impôts (BOI). While the interpretations of tax laws contained in such documents are not binding on the taxpayer, published interpretations are binding on the tax administration (LPF, art. L.80 A) In the event of a dispute between the taxpayer and the tax administration, the taxpayer may commence an action before the appropriate court for a judicial interpretation of the rules of law at issue; such judicial interpretation is, subject to appeal, definitive and binding as between the tax administration and such taxpayer. Where the tax administration wishes to change its interpretation of a rule of tax law in a manner less favorable to the taxpayer, such change may, in principle, only be applied prospectively.

The rule pursuant to which the tax administration is bound by an administrative interpretation (LPF, art. L.80 A) also applies where the tax administration has taken a formal position with respect to the manner in which a provision of tax law is applied to a set of facts concerning the taxpayer (LPF, art. L.80 B(1)). The tax administrations interpretation is only binding where it is in writing and signed by the proper administrative authorities and only where the taxpayer is officially informed of said interpretation. In most instances, the tax administrations interpretation is given either in the context of a tax audit or tax litigation. The taxpayer may no longer benefit from an administrative interpretation in the following cases: (i) where the tax administration decides to modify its interpretation, in which case the previous interpretation is not considered null and void until the taxpayer is informed of the modification, (ii) the legislation applicable to the factual situation has changed in which case the tax administration need not notify the taxpayer of said change, (iii) the factual situation which was the subject of the administrative interpretation itself has changed or (iv) the factual situation alleged by the taxpayer is untrue.

 A taxpayer may obtain an advance ruling from the tax administration concerning a contemplated contract or agreement (LPF, arts. 64 and 64 B). To obtain such a ruling and for such ruling to be binding, the request must meet the four following conditions:

1) it must concern the effect, and specifically the tax consequences, of a contract or agreement susceptible of being challenged on the basis of abuse of law  ;

2) it must be made prior to the signing of the contract or agreement ;

3) it must be in writing and signed by at least one of the parties to the contract or agreement or a representative thereof, and

4) it must contain all information necessary to evaluate the actual effect of the transaction, including a clear and complete statement of the envisioned transaction, the exact name and address of each of the parties, a description of the ties already existing between the parties and copies of all documents necessary to conduct such evaluation.