France vs Valueclick Ltd. Dec 2020, Supreme Administrative Court (CAA), Case No 420174

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The issue in the case before the Supreme Administrative Court was whether an Irish company had a PE in France in a situation where employees of a French company in the same group carried out marketing, representation, management, back office and administrative assistance services on behalf of the group.

The following facts were used to substantiate the presence of a French PE:

  • French employees negotiated the terms of contracts and were involved in drafting certain contractual clauses with the customers.
  • Contracts were automatically signed by the Irish company – whether this action corresponded to a simple validation of the contracts negotiated and drawn up by the managers and employees in France.
  • Local advertising programs were developed and monitored by employees in France.
  • French employees acted to third parties as employees of the Irish company.
  • Customers did not distinguish between the Irish and the French company.

In a 2018 decision the Administrative Court had found that none of these factors established that employees in France had been authorized to act on behalf of and in the name of the Irish company. The Administrative Court instead based the decision on whether contracts could be entered and services could be rendered without prior approval of the contracts by the Irish parent entity. The Court concluded that French employees could not commit its Irish principal contractually and services could not be rendered until the customer contract had been approved by the Irish company.

The Supreme Administrative Court (CAA) overturned the decision of the Administrative Court.

“ is clear from the documents in the file submitted to the trial judges that the French company has the human resources to enable it to provide the services of the Irish company independently, in particular the human resources to enable it to decide to conclude a contract with an advertiser for the provision of services operated by the Irish company.

…the French company must be regarded as having the appropriate technical resources to make it possible for the Irish company to provide the services autonomously, even though no data center used to carry out the linking functions is located in France, nor, for that matter, in Ireland.

On the issue of permanent establishment, see also the French Zimmer decision from 2010 and the later Google decision from 2017.

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France vs Valueclick CAA DEC2020


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