The administration found that the reimbursement of a charge represented a transfer of profits abroad where the French company has not substantiated the benefit of the services which the French company could perform itself. Incomplete documents submitted by the company was not considered proof of the purported benefits.
This analysis was confirmed by the French Administrative Court of Appeal.
“….Although it [the company] claims that the expenses in question were in the nature of services relating to technical assistance provided in its own interest, it does not establish this by means of the fragmentary and general documents that it produces, whereas it asserts, moreover, that the expenses that it reimbursed paid for the coordination of the general policy of the Borsumif Y group. .. in commercial, legal and financial matters between the various companies belonging to the group; that it does not justify either the existence of the financial counterpart that it alleges by producing documents attesting to the interventions of employees with financial institutions or the need for a guarantee from the parent company in the negotiation of loans that also concern a third company for years, some of which are moreover outside the period in dispute ; that consequently, it is rightly that the administration has, by application of the provisions of article 57 of the general tax code, reintegrated the sums in question into the profits of the limited company BORSUMIJ Y. .. FRANCE taxable for corporation tax for the years 1979 and 1980…”France vs SA Borsumij Whery France, Feb 1997, Adm Court of appeal,