A network of partners to help you navigate your tax challenges
The firm’s tax team draws on a wide network of partners, including certified public accountants, notaries, asset appraisers, auditors, wealth managers, and colleagues specializing in other fields. We also have a strong network of colleagues abroad to help you manage your international matters.
Corporate Taxation
(IS, transfer pricing, restructuring, VAT, tax consolidation)
In day-to-day business operations, common questions arise regarding the deductibility of a provision, the deductibility of an expense under a management fee agreement, or other complex transactions.
When determining the corporate tax base, it is also common to consider whether the company has failed to invoice a group affiliate for any benefit received free of charge and, more generally, for asset transactions, guarantees provided, or other transactions carried out without any price negotiation when they involve intra-group transactions.
In doing so, these group transactions may lead us to consider establishing a tax consolidation scope together, in order to mitigate the drawbacks mentioned above.
The complexity of your operations, or the fact that you’re launching new ones or developing new products, also leads you to wonder how to apply VAT and at what rate.
As a company grows, it may need to consider agreements with partners that could result in mergers, partial asset transfers, universal transfers of assets, or any other consolidation or deconsolidation transactions.
Finally, if the company operates in multiple countries, it will be necessary to set the prices for goods and services—or even financing arrangements—between all entities within the group. These issues have significant tax implications and are generally referred to as “transfer pricing.” Operating in multiple countries may also lead you to use currency or interest rate hedges, the tax and accounting rules for which require a certain level of legal analysis that we can provide.
Tax Audits and Litigation
A tax audit is a dreaded milestone in the life of a business. The practical process of an audit, the procedures that govern it, and the potentially significant consequences for the company’s operations make a tax audit a critical juncture that must be handled effectively whenever it occurs.
Towery has on staff a former tax inspector whose professional experience with the tax authorities specifically involved conducting tax audits of small and medium-sized businesses.
As a result, we are well-versed in the methods used by the tax authorities and the logic behind their procedures—both in terms of formal rules and unwritten practices—so that we can provide you with the best possible advice and mount the most effective defense.
We will be able to handle the audit process from the moment we receive the audit notice or report, and throughout the entire process leading up to the collection of any adjustments and additional assessments.
We will also be by your side when it comes to continuing your defense in court, both at the trial level and on appeal, as well as in developing a strategy for the years following the audit, during which you may also be subject to audits on the same issues.
Tax residency, reporting of foreign assets
Executives often relocate and may even be foreign nationals. It is therefore often necessary to provide a clear overview of your primary residence, your professional and family situation, in order to assess whether your current tax residence is appropriate and to help you gauge the extent to which you can relocate while remaining within the framework of your current or future tax residence.
Similarly, this mobility sometimes results in assets being held abroad for many years, which now poses significant problems, given the sharp increase in penalties for failing to report their existence each year.
Finally, we may also need to advise you on the tax residency of businesses, particularly regarding the existence—or lack thereof—of what is known in tax law as a “permanent establishment,” that is, a branch that must report taxable income abroad, or in France, for companies headquartered abroad.
These situations pose long-term risks, given the extended statute of limitations. They are also subject to harsher penalties than domestic offenses.
Wealth Taxation
(Sale of securities, business assets subject to the wealth tax, transfer/inheritance)
As a business owner, your tax situation is closely tied to that of your company. Indeed, the company’s future regularly affects your tax situation—whether it’s simply a matter of choosing a compensation structure (salaries, dividends, etc.) or, more significantly, in the event of a sale, merger, the creation of a holding company, or other restructuring.
These legal transactions affect the securities you hold, as they are often exchanged with others as part of these transactions. You may also hold a management package, which the tax authorities will scrutinize closely.
Similarly, the securities you hold may constitute professional real estate assets that, under the law, are generally exempt or largely exempt from the real estate wealth tax (IFI) for executive employees. However, the rules for obtaining these exemptions are restrictive and may conflict with the structuring or restructuring measures that you would initially be advised to implement solely for the company’s needs.
Finally, small and medium-sized businesses are often family-owned, and it is always worth considering ways to reduce the tax burden associated with transferring control of the business, so that a plan is in place when the time comes.
Whether you are an entrepreneur or not, you may be managing a substantial and diversified estate, and we can help you plan its transfer to the next generation in a way that minimizes estate taxes while allowing you to enjoy the fruits of your estate for the rest of your life. Several strategies can be implemented, such as dismemberment, changes to matrimonial property regimes, asset conversion, and the use of life insurance policies, for example.
Structuring and Restructuring of Regulated Professional Occupations
The firm’s tax (and corporate) team has developed extensive expertise in restructuring regulated professions.
We have assisted several of Paris’s leading notary firms in structuring their capital and organizing their governance.
We have also assisted numerous law firms in restructuring their operations and optimizing their partners’ compensation, including both French firms and those with international offices—particularly partnerships—with partners residing in France and abroad.
Insurance, mutual insurance companies, and associations
(Tax on insurance contracts, Tax on surplus reserves (bonus/malus), technical reserves, nonprofit organizations)
The insurance industry is highly specialized; it operates in a manner that is the opposite of any other business venture. Specifically, an insurer first collects revenue in the form of insurance premiums, which it then invests, and only later incurs the technical expenses associated with insured claims.
These characteristics are accompanied by a very specific tax regime, notably the tax on insurance contracts, which is levied on insurance premiums, as well as certain specific taxes such as the tax on surplus reserves and a whole range of tax measures designed to broaden the corporate tax base, whether in the area of financial or real estate investments or in the area of technical results derived from premiums and claims.
Similarly, this is a sector undergoing change; following the mutual insurance companies in 1994, mutual societies governed by the Mutual Insurance Code and provident institutions governed by the Social Security Code were subject to taxation in 2012, with tax provisions allowing for a tax-neutral transition regarding unrealized capital gains or provisions established prior to that transition.
These changes are accompanied by consolidation within the sector and require a thorough understanding of tax restructuring mechanisms such as mergers and partial asset transfers, as well as mechanisms such as tax consolidation within an accounting consolidation scope.
As a player in the insurance industry, you can count on Towery to assist you with these highly specialized tax issues.
