Holding company lawyer Paris: prove active management and its tax effects.

An active holding company (holding animatrice) is a company whose main activity, beyond managing its shareholdings, is the effective conduct of its group's policy and the control of its operating subsidiaries. It may provide them, on a purely internal basis, with administrative, legal, accounting, financial or property services. This definition, first laid down by case law, now appears in Article 787 B of the General Tax Code for the Dutreil pact. The Council of State had adopted it in capital gains matters, finding active a holding whose board minutes described concrete actions, such as seeking partners or choosing research projects, going beyond the powers of a mere shareholder (CE, 13 June 2018, No. 395495). A passive holding, by contrast, merely holds shares and receives dividends. The distinction has significant tax effects: only the active holding is treated as a company carrying on a commercial activity, which opens in particular the partial exemption from gift and inheritance duties. A holding that does not actively manage remains eligible in one specific case: if it has signed the collective commitment covering the shares of its subsidiary, its own shares transferred are exempt in proportion to that shareholding in its gross assets (b, 3 of the same Article). The firm first checks what the holding actually does, before looking at what its articles of association say.

Yes, for the Dutreil pact. The version of Article 787 B of the General Tax Code in force since 31 December 2023 treats as carrying on a commercial activity a company whose main activity, beyond managing a portfolio of shareholdings, is active participation in the conduct of the policy of its group, made up of companies controlled directly or indirectly. Before this codification, the status rested on the case law of the Court of Cassation and the Council of State and on administrative doctrine. Law No. 2026-103 of 19 February 2026, the Finance Act for 2026, in its Article 8, supplemented this text: it excludes from the exemption the fraction of value representing certain assets not exclusively allocated to the activity, such as housing, passenger vehicles or works of art, and raises the individual retention commitment from four to six years. The statutory definition does not, however, settle the question of proof: it must still be established that the holding actually manages its group. For each transfer, the firm checks the version of the text applicable on its date, because the conditions have changed several times.

No. Article 787 B requires the subsidiaries to be controlled, which is not the same as holding the majority of the capital, and that control does not in itself prove active management. The judicial court of Tours recalled this in holding that "While the holding's majority shareholding in the capital of its subsidiary is a necessary element to ensure control of the subsidiary, it is not sufficient to establish the status of active holding" (our translation) (TJ Tours, 28 April 2026, No. 24/02056). In that case, the holding could show no management agreement, no minutes evidencing its involvement in the subsidiaries' strategy and no resources of its own, and the exemption was refused. The Paris Court of Appeal takes the same approach, for the former wealth tax (impôt de solidarité sur la fortune), where the holding owns the entire capital of its subsidiaries and provides them with funds, holding that financial support is merely the exercise of a shareholder's prerogatives (CA Paris, pôle 5 ch. 10, 15 January 2026, No. 22/19449). A majority gives the power to manage; the file must show that this power was exercised, through identifiable and dated decisions. The firm therefore looks for the holding's positive acts, beyond the mere distribution of the capital.

An agreement helps, but it is not enough if its performance is not shown. The Court of Cassation quashed a court of appeal that had upheld the status on the strength of a management contract, a shareholders' agreement and standard articles of association imposed on the subsidiaries, without finding that the holding had actually put those means into effect (Cass. com., 3 March 2021, No. 19-22.397). In another case, the Paris Court of Appeal set aside management and assistance agreements drafted in very general terms: the invoices issued did not establish the nature of the services actually performed, or that the holding had conducted the group's policy (CA Paris, 28 May 2026, No. 23/05988). The same court noted that a holding "must show concrete actions without stopping at the literal statements contained in its corporate purpose" (our translation) (CA Paris, pôle 5 ch. 10, 10 February 2025, No. 22/18141). The agreement must therefore be followed by reports, decisions and itemised invoices describing what was done, for which subsidiary and on what date. The firm reads these documents as the tax inspector would.

Not by itself. The court distinguishes the action of the holding from that of the individual who runs it. In the case decided by the Paris Court of Appeal on 28 May 2026, concerning the former wealth tax, the director chaired the holding and administered the operating subsidiaries, and their central role in the group was not disputed. The court nevertheless held that the taxpayers failed to prove that the holding itself, and not its sole shareholder acting as director of the various companies, had conducted the group's policy (CA Paris, 28 May 2026, No. 23/05988). On 15 January 2026, the same court held that the same directors in the holding and its subsidiaries were not enough, in the absence of other elements characterising effective active management (CA Paris, pôle 5 ch. 10, 15 January 2026, No. 22/19449). Conversely, the Council of State accepted active management where, in addition to a common chairman, the holding's minutes showed concrete decisions taken by its bodies (CE, 13 June 2018, No. 395495). The file must therefore show that decisions are taken in the name of the holding and recorded by it. The firm checks for the trace of those decisions in the holding's registers.

Active management must be the holding's main activity. The Court of Cassation holds that main-activity status must be accepted in particular where the market value of the shares of the subsidiaries managed exceeds half of total assets, on the date of the chargeable event (Cass. com., 14 October 2020, No. 18-17.955). In that judgment, the court of appeal had relied on the share of gross fixed assets on the balance sheet; the Court of Cassation quashed its decision, because that ground could not establish the main activity where the tax authority argued, with real values in support, that securities management assets predominated. It then specified that the calculation includes other assets allocated to active management, such as assets placed at the subsidiaries' disposal and cash allocated to the group (Cass. com., 11 October 2023, No. 21-24.761). Only subsidiaries that are actually managed count: the Paris Court of Appeal set aside shareholdings in property companies (sociétés civiles immobilières) that were not operating subsidiaries (CA Paris, pôle 5 ch. 10, 13 May 2024, No. 22/02881). The test rests on reliable valuations, at the right date, and not on historical book values. The firm redoes it before any transfer.

It can count, provided it is allocated to the group's activity. For the former wealth tax, the Court of Cassation held that "the cash and investment securities appearing on the balance sheet of a holding company that actively manages its group are presumed to constitute assets necessary to its professional activity, that presumption being capable of rebuttal by contrary proof, the burden of which lies on the tax authority" (our translation) (Cass. com., 11 May 2023, No. 21-15.400). In that case, unfavourable to the taxpayer, investment securities representing fifty times turnover were held not to be necessary, and only a fraction of the securities was exempted. For the Dutreil pact, the Court upheld the analysis that cash placed in capitalisation contracts, without a concrete reinvestment project, could not be presumed to be allocated to active management (Cass. com., 11 October 2023, No. 21-24.761). In that case, this cash exceeded half of the assets and the holding lost the favourable regime. Abundant cash must therefore be justified by the group's real needs, dated projects or cash management agreements that are actually used. The firm measures its weight before the transaction.

The courts accept the status of joint active management, but it requires precise proof. The Paris Court of Appeal recalls that the management of a group may be exercised jointly with another holding, while refusing the status where the taxpayer produces no document establishing that role during the taxation period (CA Paris, pôle 5 ch. 10, 15 January 2026, No. 22/19449). In that case, the holding owned about 28% of one subsidiary and 50% of another, with no agreement or decision showing joint management. For the tax reduction linked to investments in small and medium-sized enterprises, the Court of Cassation accepted that a minority shareholding does not rule out active management, but required proof that the holding had concretely exercised its prerogatives (Cass. com., 3 March 2021, No. 19-22.397). For the Dutreil pact, Article 787 B now refers to a group made up of companies controlled directly or indirectly, which requires examining the control of each subsidiary included in the calculation. A shareholding that is not actively managed does not count among the assets allocated to active management, but it remains in the total assets with which those assets are compared. The firm checks the agreements, the veto rights and the decisions actually taken jointly.

The taxpayer claiming the exemption. The Paris Court of Appeal holds this consistently: in the case decided on 30 June 2025, it upheld the refusal of the Dutreil regime for lack of minutes, management report or document showing the holding's involvement in the subsidiaries' strategy (CA Paris, pôle 5 ch. 10, 30 June 2025, No. 24/02821). It held that public relations services invoiced by the holding "therefore do not characterise the active management or joint management by the holding company but a function of advice, assistance and support to the group" (our translation) (CA Paris, pôle 5 ch. 10, 30 June 2025, No. 24/02821). On 28 May 2026, in a former wealth tax case, the court refused to order the tax authority to produce the documents gathered from the group's companies, because it no longer based its challenge on them, and noted that the taxpayers should have had the evidence from the time they filed their returns (CA Paris, 28 May 2026, No. 23/05988). The same judgment notes that they did not show that they had asked, before the recovery notice, for a copy of the documents obtained from third parties. This burden therefore lies on the family or the director, and not on the tax inspector. The proof may, however, rest on a body of consistent evidence. The firm organises that evidence into a chronological file, subsidiary by subsidiary.

The current text requires it. Point c bis of Article 787 B of the General Tax Code provides that the activity condition must be met from the conclusion of the collective retention commitment until the end of the individual commitment. The Court of Cassation had held otherwise on the wording resulting from the Law of 30 December 2009: it quashed a judgment that required the holding to keep its active management function throughout the commitments, finding that "the court of appeal, which added to the law a condition that it does not contain, infringed the above-mentioned text" (our translation) (Cass. com., 25 May 2022, No. 19-25.513). This favourable decision, rendered without remand and discharging the reassessments, applies to transfers governed by the former wording. For a transfer subject to the current text, the holding must therefore remain active throughout this period. With a collective commitment of at least two years followed by the individual commitment of six years, it covers at least eight years from the collective commitment. The text sets other starting points where the commitment is deemed made or concluded after a death. The firm checks the wording applicable on the date of the transfer before giving a view.

Article 8 of Law No. 2026-103 of 19 February 2026 amended Article 787 B and Article 787 C of the General Tax Code. First, the exemption no longer applies to the fraction of the value of the shares representing certain assets that are not exclusively allocated to the activity for at least three years before the transfer, or since their acquisition if more recent, and until the end of the individual commitment or, failing that, until their sale. These are hunting and fishing assets, passenger vehicles, yachts, pleasure boats and aircraft, jewellery, precious metals and works of art or collectors' items, other than those covered by Article 238 bis AB, racehorses or show-jumping horses, wines and spirits, housing and residences. This exclusion extends to the same assets held by the companies the holding controls. Second, the duration of the individual retention commitment goes from four to six years. For an active holding company, these rules require an inventory of the assets of each company in the group and proof of their allocation. A similar logic, specific to the former wealth tax, appears in a judgment delivered after the law, which refused to exempt the fraction of the shares corresponding to property assets not necessary to active management (Cass. com., 28 May 2026, No. 25-12.946). The firm quantifies the excluded share before any gift.

A challenge first leads to recovery of the duties evaded and late-payment interest. The tax authority may add a 40% surcharge if it establishes a deliberate breach (Article 1729 of the General Tax Code). This surcharge is not automatic. The judicial court of Tours refused the Dutreil exemption for lack of proof of active management, but ordered relief from the surcharge for deliberate breach, the tax authority not having established the donor's bad faith in its erroneous assessment of the criteria (TJ Tours, 28 April 2026, No. 24/02056). An error of classification, even confirmed by the court, is therefore not enough to establish intent. The debate on penalties is conducted separately from the debate on the merits, with its own arguments and its own documents: prior existence of agreements, opinions obtained before the transaction, consistency of the returns. The firm examines both fronts as soon as the notice of reassessment is received, because the reasoning for the penalties is already there and may be challenged in the reply.

For registration duties, Article L. 180 of the Tax Procedure Code (Livre des procédures fiscales) provides a right of reassessment until the end of the third year following that in which the deed or return was registered. This shortened period can, however, be invoked only if the liability to duties was sufficiently disclosed by the registered document, without further investigation. The Paris Court of Appeal held, in respect of a holding presented as a business asset, that mentioning the company, its purpose and the director's functions in the returns did not allow the tax authority to verify the status of active holding company (CA Paris, 28 May 2026, No. 23/05988). Failing sufficient disclosure, Article L. 186 of the same Code applies: reassessment is possible until the end of the sixth year following that of the chargeable event. A deed of gift that merely asserts that the company is active may thus expose the family to this longer period. It should be added that the retention commitments and the activity condition extend over several years after the transfer. The firm keeps and organises the proof file for that entire period.

Article L. 80 B of the Tax Procedure Code allows a good-faith taxpayer to ask the tax authority to take a formal position on the assessment of a factual situation under a tax provision. Where a written, precise and complete request is submitted, the tax authority rules within three months, and its reply is thereafter binding on it under the conditions laid down by the text. Its silence at the end of that period does not, in this framework, amount to validation of the status. For an active holding company, the value of the step depends on the quality of the file: an imprecise or incomplete request gives no protection. It must describe the group, the subsidiaries managed, the decisions taken, the agreements actually carried out and the composition of the assets. For the value of the shares given, Article L. 18 of the same Code sets out a separate procedure, reserved for shares of the company in which the donor holds management functions and excluded for companies whose main activity is managing their own assets. The firm checks whether the file is strong enough to be submitted to the tax authority, or whether it must first be completed.