Types of securities of companies with a preponderance of real estate

The question of whether or not shares in companies with a preponderance of real estate should be treated as real estate held directly for the purposes of applying tax rules under the conventional framework has been the subject of much debate.

For a long time, the French Conseil d’Etat, with respect to taxes falling within its jurisdiction, has relied on domestic law to largely treat shares in companies with a preponderance of rest estate as real estate, and has ultimately refrained from such classification only in cases where the treaty contains an express provision to the contrary. The French Cour de Cassation, for its part, adopts a more nuanced approach for the taxes under its jurisdiction, scrupulously respecting the principle of the treaty’s primacy over domestic law and seeking to ascertain the intent of its drafters in determining whether or not to apply the assimilation. The recent ruling issued by the High Court on April 2, 2025, does not appear to call into question its traditional approach in this area.

An analysis of the evolution of case law in both courts leads Pascal JULIEN-SAINT-AMAND and his co-authors to propose a framework for interpreting the law in this area based on the relevant court system.

The positions set forth in this article, published by JFA, received a favorable opinion from the International Legal Committee of the Fédération nationale du droit du patrimoine (FNDP) during its plenary session.

This article is only available in French.