Management Fees and Collective Jurisprudence: Towards a New Fiscal Balance?

A Challenge to a 20-Year Dogma

For two decades, the tax regime for management fees has been rigidly framed, particularly since the landmark Gamlor ruling (CAA Nancy, October 9, 2003). This ruling established a strong principle: a subsidiary cannot deduct services charged by its parent company when these services overlap with the functions of the common manager. The tax administration relied on this logic to audit numerous companies between 2018 and 2023.

The consequences for companies were severe:

Rejection of the deduction of expenses for corporate tax (IS), based on the abnormal management act;
Refusal to deduct VAT on fees;
Re-integration of these expenses for the calculation of CVAE.

On this basis, even a formally concluded service agreement could face a deduction refusal if no clear distinction was made between social mandate and billed services.

The Collectivision Ruling: An Anticipated Jurisprudential Turning Point

On October 4, 2023, the Council of State issued its Collectivision ruling (n° 466887), breaking with the formalist tradition by adopting a more economic approach. The central idea? The management of a company should be assessed according to a business logic, not strict legal dogmas.

From now on:

Indirectly compensating a manager through a service agreement does not constitute abnormal management if it is established that the corporate bodies approved this arrangement;

The absence of prior direct compensation is not an irreversible decision, and does not preclude a subsequent change by the company;

The administration must prove that there has been "deterioration without compensation," in line with the principles established by the Croë Suisse ruling (CE, December 21, 2018, n° 402006).

This turnaround encourages greater recognition of management freedom, as long as it is well-structured and justified.

Initial Reactions: A Relaxation Confirmed by Lower Courts

Following Collectivision, several decisions illustrate this shift:

TA Versailles, March 21, 2024 (Raoul B): applies the Council of State's criteria for both IS deductibility and VAT.

CAA Versailles, May 7, 2024 (SAS Loga): accepts the deduction of fees paid for services performed by a president who is also the manager of the parent company, equating them to past compensation.

These rulings mark an _alignment of lower court judges_ with the new, more flexible framework, emphasizing a substantive analysis of flows and functions performed rather than a formal principle.

The CAA of Marseille Ruling of April 3, 2025: Towards a Mitigation of the Collectivision Impact?

However, a new twist clouds this liberalization movement. On referral in the Collectivision case, the Administrative Court of Appeal of Marseille (April 3, 2025, n° 23MA02484) has mitigated the impact of the Council of State ruling.

The ruling notably highlights:

The absence of explicit proof that the corporate bodies intended to indirectly compensate the manager through the service company;

The insufficiency of merely mentioning the agreement in the management report (without validation in assembly or formal decision);

The lack of precise justifications for the services actually performed in addition to the social mandate.

The consequence is clear: the audit is upheld.

This development underscores a clear message: the principle established by the Collectivision ruling has real significance only if the burden of proof is sufficiently met. It is not a blank check. Formalism continues to play a crucial role, especially in a contentious context.

A Persistent Legal Risk: The Civil Nullity of Management Fee Agreements

Alongside the tax issue, the civil validity of these agreements poses a challenge. Two rulings from the commercial chamber (2010 and 2012) have already recognized the possible nullity of a service agreement redundant with a social mandate, in the absence of a distinct counterpart.

However, the reform of contract law (2016 ordinance) has softened this view:

The requirement for a "cause" has been replaced by that of a "non-illusory counterpart" (Article 1169 of the Civil Code);

In the case of SAS, jurisprudence (Cass. com., November 24, 2015) recognizes that unless otherwise stated in the statutes, the coexistence of functions and paid services is not prohibited.

Nevertheless, this remains uncertain territory, particularly in disputes between partners or in collective proceedings. Civil vigilance must therefore accompany tax management.

How Far Will the Shift Initiated by the Collectivision Ruling Go?

The progress initiated by Collectivision marks a salutary evolution: it restores to managers a structured economic freedom while reversing the burden of proof. But this dynamic could be slowed – or at least strictly framed – by lower courts, as suggested by the April 3, 2025 ruling in Marseille.

One must therefore ask: how long will this jurisprudential shift last? And especially, under what conditions can it be fully utilized by companies?

Best Practices: Towards Securing Management Fee Agreements

To fully benefit from the evolution of the legal framework, several precautionary rules must be followed:

Document the reality of the services performed outside the social mandate;

Formalize in writing the intention of corporate bodies to resort to indirect compensation;

Have the agreement formally validated in assembly, especially if the amounts involved are significant;

Ensure the amounts charged align with the economic value of the services rendered.

These precautions are particularly crucial in family groups and management holdings, where role confusion exposes one to requalification risks.

Conclusion: Increased Vigilance During Jurisprudential Transition

The Collectivision saga illustrates an increasingly present reality in tax litigation: the consideration of an economic and managerial logic in the analysis of intra-group financial flows. While the Council of State paves the way for a more pragmatic approach, lower courts may still hinder this momentum, as shown by the mitigation provided by the referring CAA.

It is essential that companies adopt a rigorous and proactive documentation approach.

In any case, this evolution requires managers to anticipate and formalize their choices. A well-executed legal and tax structuring remains their best defense against audit risks.

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