Lupa case law continuation: rejection of a constitutionality question (“question prioritaire de constitutionnalité”) on the restricted scope of application of the Quemener remedy

In a decision dated 28 July 2017 (CE n°411269), the French Supreme Court ruled not to refer to the French Constitutional Council the priority constitutionality question (“QPC”) brought by Société Lupa Immobilière in the context of the case that bears its name (6 July, n°377904, Sté Lupa France).

The QPC raised the point to know if the effective requirement of the existence of dual taxation for the application of the Quemener adjustments did conduct, first, to treat differently taxpayers placed in a similar situation regarding Article 39 duodecies of the General Tax Code, and then, to tax them disregarding their capacity to contribute.

In this decision, the French Supreme Court ruled that, first, the principles of the Quemener adjustments, which only apply in the case of a dual taxation or dual deduction, have the effect to tax the gain or the loss issued from fixed assets sales taking into account the taxpayer’s capacity to contribute. Therefore, the Supreme Court considers that those rules do not disregard the principle of equality in relation to public burdens, but on the contrary permit to implement it. Secondly, the Supreme Court considers that the difference of treatment resulting from the Quemener adjustments directly relates to the purpose of that mechanism and does not bring an unjustified difference between taxpayers placed in a similar situation. Indeed, according to the Supreme Court, the treatment applied in case of a gain or a loss will be the same

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Sarvi Keyhani

Sarvi Keyhani, Partner, specializes in real estate tax. She advises international investors on major real estate operations. She particularly advises a large number of international real estate funds on the […]