A corporate group lawyer structures and secures relations between the holding company and its subsidiaries. The lawyer acts on setting up the holding company, intragroup agreements, the parent-subsidiary regime, tax consolidation, transfer pricing and restructurings. This support aligns the group’s legal organisation with your strategy and helps prevent liability risks.
Corporate Group and Holding Company Lawyer in France
Most businesses that have reached a significant size are organised as a group of companies. Holding company, subsidiaries, sub-subsidiaries, joint ventures, branches and minority interests form a whole whose legal, tax, employment and operational consistency must be kept under control. Our firm assists business leaders and in-house legal teams in designing, documenting and managing groups day to day, in Paris and throughout France.
This page sets out our approach to groups: holding company structures, tax consolidation, intragroup agreements, transfer pricing, group interest, internal restructurings and litigation. Each situation is reviewed in light of the applicable rules and the client’s strategy.
Structuring a group in France: holding company and subsidiaries
A holding company centralises shareholdings and, often, cash management or certain support functions. It may be passive (simply holding shareholdings) or active (taking an active part in steering the subsidiaries’ policy and providing genuine services). This distinction is essential for several tax regimes, such as the Dutreil pact and the IFI, the French real estate wealth tax.
The initial structure rests on a choice of legal form – SAS (simplified joint-stock company), SA (public limited company), SARL (limited liability company), société civile (non-trading company) or foreign holding company – a shareholders’ agreement, a distribution policy and a financing scheme. Using an active holding company (holding animatrice) makes it possible, subject to strict documentary conditions, for its activity to be treated as commercial for IFI purposes (Article 966 of the French Tax Code, CGI) and for its shares to qualify for the Dutreil pact (Article 787 B of the French Tax Code (in French)). That article refers to a company whose main activity is taking an active part in steering its group’s policy; this active role must be genuine and demonstrated.
Parent-subsidiary regime and tax consolidation
The parent-subsidiary regime (régime mère-fille, Articles 145 and 216 of the CGI) exempts the parent company from corporate income tax on 95% of the dividends received from its French and foreign subsidiaries (a flat-rate share of costs and expenses of 5%). It requires a holding of at least 5% of the share capital, held in full ownership or bare ownership, with a two-year holding commitment. The regime is reserved for companies subject to corporate income tax at the standard rate (Article 145 of the CGI).
Tax consolidation (intégration fiscale, Articles 223 A et seq. of the CGI) allows, by election, the results of group companies to be offset against each other, provided that the parent company holds at least 95% of the capital of each subsidiary, directly or indirectly. The overall result is calculated after neutralising certain intragroup transactions. The effects are powerful (immediate offset of one entity’s losses against the others’ profits), but the regime requires rigorous documentation and particular attention when a company leaves the group.
Directive (EU) 2016/1164 (known as “ATAD”) introduced rules limiting the deductibility of net borrowing costs (Article 212 bis CGI), with specific arrangements for tax-consolidated groups. These rules must be anticipated as soon as intragroup financing is structured.
Intragroup agreements and transfer pricing
Flows between companies in the same group (services, secondment of staff, trade mark or patent royalties, cash pooling agreements, intragroup financing) must be formalised in written agreements performed on market terms. Article L. 511-7 I 3° of the French Monetary and Financial Code (Code monétaire et financier) allows, as an exception to the banking monopoly, cash management transactions between companies directly or indirectly linked by capital ties that give one of them effective control over the others.
Transfer pricing falls under Article 57 of the CGI and the documentation requirements of Article L. 13 AA of the French Tax Procedure Code (in French) (Livre des procédures fiscales, LPF) for companies whose turnover excluding VAT or gross assets reach €150 million, or which are linked to such a company; Article L. 13 AB adds supplementary documentation for transactions with a non-cooperative State or territory. The obligation to document cross-border transactions (master file and local file, OECD methods) is strictly enforced. We prepare and update this documentation, in coordination with our clients’ in-house tax specialists.
Group interest and legal certainty
French corporate criminal law has recognised group interest as a justification for misuse of corporate assets (abus de biens sociaux) since the Rozenblum case law (French Supreme Court, Cour de cassation, criminal chamber, 4 February 1985, appeal No. 84-91.581). Financial support between companies in the same group may be justified by a common economic, social or financial interest, assessed in light of a policy drawn up for the group as a whole. It must not be without consideration, upset the balance between the respective commitments of the companies concerned, or exceed the financial means of the company bearing the cost.
This recognition does not exempt each company from its own rules (individual corporate interest, directors’ powers, regulated agreements under Article L. 225-38 of the French Commercial Code for the SA and Article L. 227-10 for the SAS). Intragroup agreements that fall within this scope follow the authorisation and approval procedure, with a special report presented to the shareholders’ meeting (Article L. 225-40). In the SA, the procedure applies neither to ordinary transactions concluded on normal terms nor to agreements between a company and its 100%-owned subsidiary (Article L. 225-39).
Group restructurings
Internal restructurings aim to simplify the group structure, prepare a sale, optimise tax or respond to a change in strategy. The usual transactions are: a merger by absorption between group companies; a universal transfer of assets and liabilities (transmission universelle de patrimoine, TUP) from a 100%-owned subsidiary (Article 1844-5 of the French Civil Code); a partial asset contribution, which the companies may elect to place under the demerger regime (Article L. 236-27 of the Commercial Code); hiving down a business line into a subsidiary; and the creation or dissolution of entities.
The preferential merger regime (Article 210 A CGI) makes restructuring transactions tax-neutral, subject to undertakings given in the merger agreement: taking over provisions whose taxation is deferred, spreading the reintegration of gains on depreciable assets, and calculating future gains on non-depreciable assets on the basis of their original tax value. Partial asset contributions covering a complete business line benefit from the same regime (Article 210 B CGI); otherwise, approval (agrément) is required, subject in particular to an undertaking to hold the shares received for three years. For cross-border intra-EU transactions, Directive (EU) 2019/2121, transposed into French law, simplifies the transactions and strengthens the protection of stakeholders.
Litigation and liability within the group
Groups of companies give rise to specific disputes: challenges to a regulated agreement, proceedings against a director for misuse of corporate assets or abuse of powers (Article L. 242-6 of the Commercial Code for the SA), challenges to a contribution or merger, disputes between majority and minority shareholders of a subsidiary, and claims against the parent company for interference in a subsidiary’s management.
The question of the parent company’s liability for its subsidiary’s commitments arises regularly. The principle that legal entities are autonomous limits this liability, except in particular cases (commingling of assets, established interference, express guarantee undertaking, doctrine of appearance (théorie de l’apparence)). With regard to human rights, health, safety and the environment, the duty of vigilance law (Articles L. 225-102-1 (in French) and L. 225-102-2 of the Commercial Code, numbering in force since 1 January 2025) requires companies employing at least 5,000 employees in France or 10,000 employees worldwide, including subsidiaries, to draw up and implement a vigilance plan covering their controlled subsidiaries and the subcontractors or suppliers with which they have an established commercial relationship.
International groups
Groups with an international dimension draw on bilateral tax treaties, European Union rules (Parent-Subsidiary Directive, Interest and Royalties Directive, ATAD rules) and OECD principles (BEPS, Pillar Two). Article 209 B of the CGI allows France to tax the profits of entities controlled abroad that are subject to a privileged tax regime; Article 238 A limits the deduction of sums paid to persons subject to such a regime.
OECD Pillar Two (15% global minimum tax) applies to groups with consolidated turnover exceeding €750 million. Reporting obligations are set out in Directive (EU) 2022/2523, transposed into French law. We assist groups with compliance and with anticipating the financial impact.
How our firm assists you
Our team assists business leaders and in-house legal teams with initial structuring, day-to-day management, restructurings, external growth transactions and litigation. We coordinate our work with our tax, corporate, mergers and acquisitions and company law teams.
To discuss a structuring project or a recurring group management issue, please contact us using the firm’s contact form. An initial discussion helps frame the issues and priorities.
Frequently asked questions
When should you set up a holding company in France?
A holding company is relevant when several objectives combine: structured holding of shareholdings, tax-efficient upstreaming of dividends (parent-subsidiary regime), organisation of family succession (Dutreil pact), leveraged acquisition of a new company, and separation between operating activities and personal assets. The decision must rest on a prior economic, legal and tax analysis.
Parent-subsidiary regime and tax consolidation: what are the differences?
The parent-subsidiary regime exempts 95% of the dividends received by the parent, without requiring a majority holding (5% is enough). Tax consolidation combines the results of group companies and requires a holding of at least 95%. The two regimes are often combined, with distinct tax and administrative effects.
What is an active holding company (holding animatrice)?
A company which, in addition to managing a portfolio of shareholdings, has as its main activity taking an active part in steering its group’s policy and, where applicable and on a purely internal basis, provides specific administrative, legal, accounting, financial and property services to its subsidiaries (Article 787 B of the French Tax Code, CGI; Article 966 of the CGI for the IFI, the French real estate wealth tax). The active role must be genuine, ongoing and documented to be recognised.
Must an intragroup agreement be put in writing?
Yes. Services, trade mark or patent royalties, cash pooling agreements and any significant intragroup flow must be put in writing, performed on market terms and, for certain categories, submitted to the regulated agreements procedure. Lack of formalisation is a factor in tax reassessments and in disputes between shareholders.
What are the transfer pricing obligations in France?
Companies whose turnover excluding VAT or gross assets reach €150 million, or which are linked to such a company, must keep documentation (master file, local file) available to the tax authorities justifying their transfer pricing policy with associated enterprises established outside France (Article L. 13 AA of the French Tax Procedure Code, LPF). Article L. 13 AB adds supplementary documentation for transactions with a non-cooperative State or territory. These obligations are aligned with OECD standards.
When should a universal transfer of assets and liabilities (TUP) be used?
A TUP is suitable when the parent company wishes to dissolve a 100%-owned subsidiary without liquidation. It transfers all of the subsidiary’s assets and liabilities to the parent, simplifies the group structure and may, subject to conditions, benefit from the tax-neutral regime. It requires a declaration, a thirty-day creditor objection period, and then publication in the RCS (Trade and Companies Register).
Is the parent company liable for its subsidiary’s debts?
In principle, no: each company has a separate legal personality. Liability may arise in limited cases: commingling of assets, established interference in management, express guarantee undertaking, actio pauliana (fraude paulienne), and certain specific provisions (employment law, environmental law, duty of vigilance law). Rigorous intragroup governance helps limit these risks.
Does OECD Pillar Two apply to my group?
Pillar Two targets multinational groups whose consolidated turnover exceeds €750 million in two of the last four financial years. It introduces an effective global minimum tax of 15% on the profits of entities located in each jurisdiction. A prior analysis identifies the entities affected, corrective measures and reporting obligations.
Every situation is different: the information on this page is general and does not replace legal advice tailored to your case. The firm makes no promise of outcome; it commits to the means it deploys.
