Review of the administrative doctrine on the RTC and the ITC – Episode 3: Assessment of SME status in the case of group entry or exit

We published a preview of the main issues affected by the revision of the administrative doctrine on 13 July 2021. In this third summary article we propose to analyze the evolution the definition of SMEs proposed by the administration (BOI-BIC-RICI-10-10-50). SMEs within the meaning of European Union law benefit from the immediate reimbursement of their RTC claim, and the ITC – which is dedicated to them.

A return to an assessment over two consecutive financial years in the case of entry as well as exit of a group

When an company exceeds the required staff and financial thresholds at the date of the closure of the accounts (have fewer than 250 employees and an annual turnover of less than 50 million euros, or an annual balance sheet total of less than 43 million euros) it only loses the status of SME if this exceeds the thresholds for two consecutive financial years (cf. Article 4 of Annex I to Commission Regulation (EU) No 614/2014 of 17 June 2014).

In the specific cases of entry into or exit from a group, the tax administration, relying on the Euratom Commission decision 2012/838/EU of 18 December 2012, considered that the assessment of the thresholds over a period of two years was not justified and that the company immediately lost (or obtained) the status of SME starting from the date of completion of the transaction that led to the change in shareholding (Rescrit BOI-RES-000034 of 6 March 2019).

However, the Administrative Court of Appeal of Nancy stated on 3 December 2020 that the Euratom decision could only be binding on its addressees (the European Atomic Energy Community), since it was not taken over in the European Commission’s regulation of 17 June 2014 on SMEs.

The tax administration refers to its 2019 ruling and indicates that the assessment of the thresholds over two consecutive financial years also applies in the case of entry or exit from a group.


While this new doctrine is beneficial to companies when they join a group, it should be noted that in case where a company leaves a group, it will not be able to benefit immediately from the ITC and the immediate reimbursement of its RTC. The company will have to wait until it meets the staff and financial thresholds at the end of two consecutive financial years.

Lucille Chabanel

Lucille has more than 14 years’ experience in tax law. She is a member of the corporate tax department since 2002 and joined the R&D group in 2004. She has […]

Béatrice Prim

Beatrice, a Senior Manager who has been attached to the research and development team since 2010, advises her clients on CIR (security, defence during tax audits) and coordinates missions on […]