The Conseil d'État CARMEJANE LLC Decision of 12 November 2025
The Conseil d'État's CARMEJANE LLC decision of 12 November 2025 reminds non-residents holding real estate in France of the risks of holding it through a foreign company: this does not guarantee the absence of French taxation; worse, where the property is made available to the shareholders free of charge, the company may be liable for significant corporate tax even though the property is not rented out. The decision treats a US LLC as equivalent to a French SAS.
Key takeaways:
👉 A non-French tax resident must structure and organise the holding of French real estate in advance to avoid being subject to French corporate tax on rent that was never received.
👉 The choice of structure in France is very important: favour French SCIs over LLCs or other foreign entities if you wish to invest in French real estate.
👉 If a commercial-type structure subject to corporate tax cannot be avoided, entrust the accounting to a chartered accountant and the follow-up to a tax lawyer to avoid paying excessive tax (booking depreciation in the accounts).
The facts and the decision:
✔️ In this case, a US "LLC" (limited liability company) held a property in Provence, made available free of charge to its shareholders (a married couple resident in the United States) and their parents. The LLC neither received nor declared any rent in France.
✔️ The tax authorities, having noted that the property had been made available free of charge to the shareholders or third parties, added back to Carmejane LLC's profits for 2011 and 2012 the rent it had thus forgone, on the undisputed ground that this waiver did not constitute normal management. There is therefore a deemed profit.
✔️ Carmejane LLC, whose seat is in California, challenged the additional corporate tax assessments on the ground that a US LLC should not be regarded as a French enterprise subject to corporate tax (but rather to income tax).
👉 The Conseil d'État held that the US LLC had to be treated as a société par actions simplifiée (SAS) and is therefore subject to French corporate tax on the profit deemed realised through the free-of-charge availability: the LLC in question, notably because of its shareholders' limited liability and its legal features, is comparable to a French SAS.
Eve d'Onorio di Méo
Lawyer, Certified Specialist in Tax Law
Member of the Marseille Bar (France) and of the Geneva Bar Register (Switzerland)
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