Assogna · Law Firm
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  • Corporate tax

Management fees and indirect remuneration of managers: Marseille Administrative Court of Appeal strengthens evidentiary requirements

  • Corporate tax

The Administrative Court of Appeal of Marseille refines the conditions under which a company may validly remunerate its manager indirectly through a service agreement.

In a judgment of April 3, 2025 (No. 23MA02484), delivered on referral following the “Sté Collectivision” decision of the French Conseil d’État, the 3rd Chamber of the Administrative Court of Appeal of Marseille clarified the conditions under which a company may validly remunerate its manager indirectly via a service agreement. In this case, due to the absence of evidence of an explicit corporate decision and a real counterpart for the company, the payment of fees was reclassified as an abnormal act of management. The court rigorously applies the interpretative framework set out by the Conseil d’État and reiterates the requirement for robust justification, both in form and substance, to avoid the characterization of unjustified impoverishment.

The judgment clearly illustrates the very strict requirements imposed by the administrative judge regarding indirect remuneration of managers through intercompany service agreements. While such structuring remains legally possible, it requires:

  • An explicit resolution by the shareholders or the board of directors, formally recorded;
  • Documented proof of specific services unrelated to the duties inherent to the corporate mandate;
  • Particular vigilance in case of conflicts of interest or common management.

Failing this, the company faces the risk of corporate income tax reassessments, penalties, and potentially VAT adjustments.

The company Collectivision, an SARL managed by Mr. A., entered into a service agreement in June 2013 with the company Sonely, of which Mr. A. was also co-manager and shareholder. This agreement provided for a wide range of administrative, financial, and strategic missions (updating management tools, operational coordination, group development…).

However, these services were actually performed by the manager himself, through Sonely. For the tax authorities, the fees paid to Sonely corresponded in reality to indirect remuneration of Mr. A., not properly decided by the competent corporate bodies, and without consideration distinct from his duties as manager. The administration therefore reintegrated these expenses for the 2013 fiscal year as an abnormal act of management (AAM).

The company challenged this reassessment, first before the administrative tribunal, then before the Administrative Court of Appeal of Marseille, following partial annulment by the Conseil d’État (Sté Collectivision, CE, Oct. 4, 2023, No. 466887). According to the Conseil d’État, a company may, by agreement, indirectly remunerate its manager via another company, without this being per se an AAM. However, such indirect remuneration is only permissible if the competent corporate bodies expressly intended to remunerate the manager by this means and if the company can demonstrate an actual consideration, i.e., services distinct from the duties attached to the corporate mandate.

Otherwise, the payment is deemed unjustified impoverishment for the company and constitutes an act unrelated to normal commercial management (Articles 38 and 209 of the French Tax Code).

In this case, the CAA of Marseille found, on referral from the Conseil d’État, that:

  • No evidence of a valid corporate decision was provided. The mere management report mentioning the existence of the agreement, the amounts paid, and the shared ownership is not enough to demonstrate a collective decision by the shareholders approving indirect remuneration of the manager. Reference to Article L. 223-19 of the French Commercial Code is deemed insufficient.
  • No specific technical service was established. The content of the agreement is considered generic, and nothing proves that Mr. A. acted other than within the scope of his duties as manager of the SARL, whose powers were not otherwise restricted by the bylaws.
  • Assertions of more effective management linked to a second co-manager of Sonely were deemed too general and unsubstantiated. The administration had, moreover, allowed the deduction of fees corresponding to this co-manager.

The court upheld the reassessment: the fees paid to Sonely proportionate to Mr. A.’s remuneration are reclassified as an abnormal act of management, due to lack of evidence of actual consideration and formal validation by the competent corporate bodies.

  Sandro ASSOGNA
Assogna·Law Firm
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Sandro Assogna

Member of the Paris Bar, I place cross-disciplinary legal practice at the service of one conviction: protecting the rights and interests of the individual, by shedding light on complexity through the search for solutions.

A path

My professional path was built step by step, at the crossroads of several legal traditions. My initial training, enriched between Bocconi University in Milan and the Sorbonne, laid the foundations for a practice oriented towards taxation, wealth and the international dimension of the law.

My early years of practice were spent in international firms in Italy, before I joined Deloitte Société d’Avocats in Paris, where I worked for a decade in the Individual Tax and International Mobility department. A field that lies, by its very nature, at the crossroads of personal tax law, wealth law, employment law and social security — and which calls precisely for that cross-disciplinary reading that defines my practice.

At the end of 2022, I founded my own firm, designed in my image: independent, demanding, deeply committed to personalised client service.

Cross-disciplinary practice as a method

The singularity of a legal situation rarely reveals itself within a single branch of the law. An executive structuring his business wealth, a senior employee negotiating his exit, a family transferring international wealth, an individual moving his tax residency, an artist or athlete securing the taxation of international income: each of these matters reads simultaneously through the lens of tax law, wealth law, employment law — and often private international law.

This ability to analyse a question through two or three legal angles at once has accompanied me from my very first matters. It is now the heart of my method: deciphering complexity, identifying the often invisible interactions between applicable regimes, and building solutions secure in all their dimensions.

An inherently international practice

Fluent in French, Italian and English, I work regularly on cross-border matters. My network of partner counsel allows me to coordinate in real time the multi-jurisdictional implications of every matter — in Europe, the United States, Brazil, Japan and India, among others.

This international practice is not an additional service: it is consubstantial with the way I practise law, inherited from my years in international firms and nourished daily by the diversity of situations encountered.

An ongoing commitment: training and network

The demands of the legal profession require continuous training, monitoring and exchange with peers. I have chosen to embed this commitment in time, through my membership of several leading institutions:

  • IACF — Institut des Avocats Conseils Fiscaux: the leading French association of tax lawyers, which shapes the professional doctrine of the field.
  • AUREP — Association Universitaire de Recherche et d’Enseignement sur le Patrimoine: a leading academic centre in wealth engineering, bringing together academics and practitioners around research, continuing education and analysis of developments in wealth law.
  • IBA — International Bar Association: the leading global organisation of lawyers, which supports my international network and provides ongoing monitoring of developments in cross-border law.
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