In a decision dated 20 July 2017 (n°16VE00301), the Versailles Administrative Court of Appeal recognised that a company was entitled to assess the basis for computation of the technical loss and the effective loss, in the framework of a merger under the special regime of article 210 A of the French tax code, by taking into account a discount on the value of the contributed assets, for tax on latent capital gains.
In the present instance, several companies holding subsidiaries which owned real estate properties were merged into the applicant company through a dissolution without liquidation (“Transmission universelle de patrimoine”). In order to assess the respective amounts of the technical loss and the genuine loss resulting from this transaction, the applicant company retained a discount on the value of the transferred shares in the subsidiaries, corresponding to the tax on latent capital gains on the assets held by these subsidiaries. The Administrative Court of Appeal ruled that this discount could be taken into account, since it would be applied in case of a sale, provided the taxpayer can justify its principle and its amount under normal market practice.
