Management fees under French law: proving the substance of services remains key

A reminder from French tax jurisprudence

In a ruling dated 24 April 2025, the Administrative Court of Appeal of Nancy reaffirmed a key principle of French corporate taxation: the deductibility of management fees is subject to clear, documented proof of actual services rendered.

This decision is in line with the French legal framework and applies specifically to companies subject to French tax law.

Background

A holding company had signed a management services agreement with its franchisee subsidiary in the optical sector.
The services covered two fiscal years, and the company recorded a corresponding liability it intended to deduct for tax purposes.

Grounds for rejecting the deduction

The Court upheld the tax authorities’ position, based on the following:

• Invoices lacked sufficient detail (« management fees » with no description of services);
• No specific resources were identified to carry out the services;
• The services overlapped with the duties of the company manager and the franchise agreement.

Best practices for securing your management fee agreements

To ensure the tax deductibility of management fees under French law, companies should:

• Provide detailed descriptions of each service (nature, duration, value added)
• Demonstrate the resources mobilized (personnel, tools, time allocation)
• Avoid duplication with other contractual roles (e.g. executive management or franchise terms)

A more flexible framework, but unchanged requirements

A more flexible framework, but unchanged requirements

Since the Collectivision ruling by the French Conseil d’État (2023), case law has taken a more flexible stance on management fees as a form of indirect compensation for executives.

However, the burden of proof remains fully on the taxpayer to demonstrate that the services are real, effective, and beneficial to the company.

How DELCADE can assist

At DELCADE, our lawyers advise clients—corporate groups, holding companies, executive teams—on the structuring, documentation and audit-readiness of their management fee agreements, fully compliant with French tax rules.