Comments:
The issue in the case before the Administrative Court of Appeal of Paris 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.
However, the Administrative Court 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 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 decision of the Administrative Court has now been appealed to the French Supreme Court.
Source
Link to the court case can be found HERE
