The Carmejane LLC decision of the French Supreme Tax Court rendered on November 12, 2025 serves as a reminder for individuals (generally non-French tax residents) who own a residence in France through a foreign company.
In this case, a Californian LLC owned a property in Provence, which was made available free of charge to its partners (a married couple who were US residents) and their parents. The LLC did not receive or declare any rent in France.
The French Supreme Tax Court assimilated the foreign entity to a French equivalent company. Carmejane LLC is considered equivalent to a French SAS (simplified joint stock company) in light of the main criterion of limited liability for partners. It is therefore subject to corporate income tax solely because of its form. There is no need to discuss its profit-making nature in this case: the form of the entity is sufficient.
This has an immediate adverse consequence: the free provision of the property does not constitute normal management; it is a waiver of income. The administration can therefore recapture the "missing" rent into the taxable income, assessing it in this case by reference to the market value of the property multiplied by a yield rate.
In this instance, given the taxpayers' lack of cooperation during the tax audit phase, the default assessment procedure was applied, shifting the burden of proof to the company.
The message is clear. First, it is never a good idea to refuse to cooperate during a tax audit. Second, owning property located in France through a foreign company does not guarantee exemption from taxation in France, even when the property is used free of charge by non-resident partners and/or their families.
It is regrettable that the question was not asked in light of the France-US tax treaty, as the conclusion could have been quite different. In any event, it should become second nature to think ahead about the form of the structure and the French tax consequences depending on the use of the property.
Summary The use of a tax-transparent company abroad does not provide protection: a Californian LLC was treated as a French SAS and taxed in France on the basis of theoretical rent due for the provision of free accommodation to family members. |
Article published in French in Les Echos on January 14, 2026
