#Management Fees Lawyer in France

A management fees lawyer ensures that the agreements under which a holding company invoices its subsidiaries for management or support services are legally sound. These management fees pay for management, strategy or administrative support services provided within a group. They are widely used, but their legal and tax treatment remains sensitive. A poorly drafted agreement exposes the company to recharacterisation, to the disallowance of the deduction and to related risks. Hashtag Avocats, a law firm in Paris, assists groups and their corporate officers with these intragroup arrangements. Every situation is different and calls for a dedicated analysis.

What is a management fee agreement in France?

A management fee agreement is a services contract between two companies of the same group. The service provider, often the holding company, provides the subsidiary with leadership, management or technical assistance services. In return, the subsidiary pays a fee. This mechanism makes it possible to pool functions and recharge costs within the group.

The difficulty lies in the actual consideration. The services invoiced must correspond to an effective service, distinct from the duties the corporate officer already performs under their corporate office (mandat social). Where the agreement duplicates the corporate office, its validity and its deductibility become fragile. The drafting of the agreement and the evidence that the services were actually provided are therefore decisive.

Tax deductibility of intragroup management fees

For tax purposes, the deduction of management fees follows the general conditions for deducting expenses. Article 39 of the French Tax Code (Code général des impôts, CGI) allows the deduction of overheads of any kind. Case law further requires that the expense be incurred in the interest of the company and correspond to actual consideration. Invoicing that corresponds to no actual service, or that is manifestly disproportionate, may be disallowed.

The tax authorities may rely on the abnormal management act doctrine (acte anormal de gestion). Under this doctrine, an expense without actual consideration for the company that bears it is not deductible. The subsidiary must therefore demonstrate that the services received are real and useful. Failing this, the reassessment covers the expense wrongly deducted, with the corresponding late-payment interest. Documenting the services is your best protection.

The risk of recharacterisation and nullity

The first legal risk concerns the validity of the agreement itself. The French Supreme Court (Cour de cassation) has ruled several times on management fee agreements that duplicate the corporate officer’s corporate office. In a judgment of its commercial chamber of 24 November 2015 (appeal No. 14-19685), the Court held that a simplified joint-stock company (SAS) could entrust its general management to a third-party company under a services agreement, provided its articles of association did not prevent it.

This ruling does not remove all risk. In other decisions, the Cour de cassation annulled, for lack of consideration, agreements that duplicated the statutory duties of the corporate officer of a public limited company (société anonyme, SA). Caution therefore requires checking the structure of the company, the drafting of the articles of association and whether the services are actually provided. A prior audit of the agreement reduces the risk of nullity.

The related-party agreement risk

A management fee agreement may fall under the regime for related-party agreements (conventions réglementées). In an SA, Article L225-38 of the French Commercial Code (Code de commerce) requires the prior authorisation of the board of directors for any agreement between the company and one of its corporate officers or shareholders holding more than 10% of the voting rights, directly or through an intermediary. An agreement with a company managed by the corporate officer often falls within this scope. In an SAS, Article L227-10 of the Commercial Code (in French) does not require prior authorisation, but a report presented to the shareholders, who vote on these agreements.

Failure to follow this procedure can have serious consequences. In an SA, an unauthorised agreement may be annulled if it has had harmful consequences for the company. In an SAS, an unapproved agreement still takes effect, but the interested person bears its harmful consequences. The authorisation, information and control procedure must therefore be followed rigorously. The lawyer checks whether the agreement falls under the related-party regime and makes each step legally sound. This analysis ties in with corporate law and group governance issues.

The social security risk linked to the corporate officer’s duties

A social security and employment risk may also arise. Where an individual in fact performs management duties on behalf of the subsidiary, under cover of an agreement with another company, the nature of the relationship may be challenged. The arrangement must not conceal a relationship of subordination or circumvent the rules applicable to the corporate officer’s remuneration.

The agreement must therefore describe services provided by a company, using its own resources, and not the disguised personal activity of a corporate officer. A loosely designed structure can fuel an employment dispute or a challenge to social security contributions. With a lawyer’s assistance, the services agreement, the corporate office and the remuneration fit together properly. Our team handles these issues in connection with structuring groups of companies and organising active holding companies (holdings animatrices).

How to make a management fee agreement legally sound

A sound agreement rests on three pillars. The agreement must precisely describe the services and how they are valued. The services must actually be performed and documented by deliverables. The related-party agreement procedure, where it applies, must be followed. These requirements add to the tax justification of the deduction.

The firm assists with drafting, auditing and defending these agreements. Every situation is different: the legal form of the company, the shareholding structure and the nature of the services shape the solution. An agreement built methodically stands up much better to a tax audit or a dispute between shareholders.

Documenting the services: the key to a sound agreement

Evidence that the services were actually provided determines how robust the agreement is. A flat-rate invoice, with no description of the services provided, weakens the company’s position. On the contrary, you should gather concrete deliverables: reports, minutes, monitoring dashboards or strategy notes. These items demonstrate that the service is real and valuable to the subsidiary.

The valuation of the fee also needs justification. A price calculated on an objective basis, consistent with the nature of the services, withstands criticism better. A fee disconnected from the service provided draws the attention of the tax authorities and of minority shareholders. The lawyer helps document this basis of calculation as soon as the agreement is signed.

FAQ

Are management fees tax-deductible in France?

Management fees are deductible if they constitute an expense within the meaning of Article 39 of the French Tax Code. According to case law, the service must be real, incurred in the interest of the company and proportionate. Without effective consideration, the tax authorities may rely on the abnormal management act doctrine and refuse the deduction. Documenting the services is essential.

Can a management fee agreement be annulled?

Yes, an agreement may be challenged where it duplicates the corporate officer’s corporate office, for lack of actual consideration. The Cour de cassation has handed down several decisions to this effect. The legal form of the company and the drafting of the articles of association influence the analysis. A prior audit reduces this risk.

Is a management fee agreement a related-party agreement?

Often, yes. In an SA (société anonyme), Article L225-38 of the French Commercial Code requires the prior authorisation of the board of directors for agreements with a corporate officer or a shareholder holding more than 10% of the voting rights. An agreement with a company managed by the corporate officer frequently falls within this scope. In an SAS (simplified joint-stock company), Article L227-10 requires a report to the shareholders, who vote on the agreement. The applicable procedure must then be followed.

Which lawyer should you consult about management fees?

A lawyer practising corporate law and tax law is best placed to make these agreements legally sound. They check legal validity, tax deductibility and compliance with the related-party regime. They also act in your defence during an audit or a dispute. Hashtag Avocats, a law firm in Paris, assists groups on these matters.

Official sources

• Article 39 of the French Tax Code (CGI), deductible expenses: Légifrance (in French)
• Article L225-38 of the French Commercial Code, related-party agreements: Légifrance (in French)
• French Supreme Court (Cour de cassation), commercial chamber, 24 November 2015, appeal No. 14-19685: Légifrance (in French)

Law verified as at 5 October 2026. This content provides general information and does not constitute legal advice. Every situation is different: contact our team to make your management fee agreement legally sound.