Article 231 of the French Tax Code bases payroll tax on the remuneration paid, weighted by the liability ratio — that is, the ratio between the receipts and other income that did not give rise to a right to deduct VAT (numerator) and total receipts and other income (denominator). A recurring question: must a debt waiver received (remission of a commercial or financial debt) be included in the denominator? The Conseil d'État ruling of 17 June 2024 (no. 474155, Sté Blue Solutions) holds that debt waivers are not receipts or other income to be included in the turnover figures used to determine liability to payroll tax. The exclusion is general: it depends neither on the nature of the waiver nor on how it is booked. This page summarises the analytical framework following the ruling of 17 June 2024.
The liability ratio that determines the payroll tax due is calculated by including in the denominator the receipts that do not give a right to deduct VAT. The central question is therefore whether each item of income should be taken into account or not — which depends on whether that income did, or did not, give rise to a right to deduct VAT.
This is where the Conseil d'État, in its ruling of 17 June 2024 (no. 474155, Sté Blue Solutions), comes in: it sets aside the analysis of the administrative court of appeal, which had treated the debt waivers received as receipts to be included in total turnover, and holds that such waivers are not receipts or other income to be included in the turnover figures used to determine liability to payroll tax.
Applied concretely to debt waivers: whether it is booked as financial income (account 76), as exceptional income or as operating income, and whether it amounts to commercial, operational or financial support, the waiver received remains outside the turnover used for payroll tax. The exclusion calls for no demonstration as to the nature of the waiver. The waiver agreement does, however, retain its full usefulness for corporate income tax, where the distinction between commercial and non-commercial support governs deductibility for the granting company (French Tax Code, art. 39, 13).
The Conseil d'État ruling of 17 June 2024, no. 474155, Sté Blue Solutions, lays down a simple rule: debt waivers are not receipts or other income to be included in the turnover figures used to determine liability to payroll tax. The exclusion applies with no distinction based on the nature of the waiver or on the income account used.
A waiver granted by a supplier or a partner because of the debtor's difficulties, or out of a commercial interest (preserving a relationship, supporting a strategic customer), amounts to commercial support. Whether it comes from a supplier, a partner or a shareholder, the debt waiver received remains outside the turnover used for payroll tax, whatever the accounting entry.
A waiver between companies of the same group may be commercial in nature (support for an operational activity of the subsidiary), financial (pure recapitalisation), or mixed. That distinction retains its full significance for corporate income tax (French Tax Code, art. 39, 13 and art. 39, 1, 8°; deductibility for the granting company). It has, however, no bearing on the turnover used for payroll tax since CE 17 June 2024, no. 474155, which excludes all debt waivers.
Operating subsidies may give a right to deduct if they are the direct consideration for a taxable transaction (price-supplement subsidies). Capital subsidies and subsidies of an exceptional nature are left out of the ratio altogether, numerator and denominator alike (BOI-TPS-TS-20-30, § 160). Other subsidies not subject to VAT are, by contrast, taken into account, and then appear in the numerator. The BOFiP framework details the various cases.
The exclusion of debt waivers from the turnover used for payroll tax calls for no demonstration as to the nature of the waiver. Documentation — a precise waiver agreement, the rationale, correspondence, minutes — does, however, retain its place for corporate income tax, where the commercial or non-commercial character of the support governs deductibility for the granting company (French Tax Code, art. 39, 13).
The firm secures debt-waiver transactions at every stage: classification (commercial / financial), booking (appropriate income account), interaction between corporate income tax and payroll tax, and defence where the tax authorities challenge the liability ratio.
For groups that regularly carry out intra-group waivers, we structure the contractual and tax documentation so that it withstands a subsequent audit.
No. Since the Conseil d'État ruling of 17 June 2024 (no. 474155, Sté Blue Solutions), debt waivers are not receipts or other income to be included in the turnover used for payroll tax, neither for the 90% threshold nor for the liability ratio. The exclusion applies whatever the nature of the waiver and whatever the accounting entry.
A commercial waiver is granted within the ordinary course of commercial relationships (remission of a supplier debt, support for a customer). A financial waiver is purely capital-based support between a shareholder and its investee. That distinction governs deductibility for corporate income tax (French Tax Code, art. 39, 13 and art. 39, 1, 8°). It has, however, no bearing on the turnover used for payroll tax, from which all debt waivers are excluded (CE 17 June 2024, no. 474155).
No, and the question has lost its significance for payroll tax. Since CE, 8th and 3rd chambers combined, 17 June 2024, no. 474155, Sté Blue Solutions, debt waivers are not receipts or other income to be included in the turnover figures used to determine liability to payroll tax: the exclusion applies whatever the income account used. The accounting entry does, however, remain relevant for corporate income tax, where deductibility for the granting company depends on whether the support is commercial or non-commercial in character (French Tax Code, art. 39, 13).
The pivotal ruling is CE, 8th and 3rd chambers combined, 17 June 2024, no. 474155, Sté Blue Solutions. It holds that debt waivers are not receipts or other income to be included in the turnover figures used to determine liability to payroll tax. Although published after the ruling, the administrative doctrine (BOFiP BOI-TPS-TS-20-30, updated 05/02/2025) has not drawn the consequences from it: it still makes the exclusion conditional on the exceptional character of the waiver (§ 165). It must be read in the light of this ruling.
For the granting company, deductibility depends on the classification: a commercial waiver is in principle deductible if it is in the company's interest; non-commercial support is in principle not deductible (French Tax Code, art. 39, 13). It becomes deductible, within strict limits, where it is granted under a conciliation agreement recorded or approved by the court (French Commercial Code, art. L. 611-8) or for the benefit of a company subject to safeguard, rehabilitation or judicial liquidation proceedings. For the beneficiary company, the waiver is taxable as income (save for specific cases of group subsidies with a return-to-better-fortune clause).
Yes. A written debt-waiver agreement is essential to document the legal nature of the transaction. It must specify: (1) the nature of the debt waived (commercial / operational / financial); (2) the amount; (3) the economic and legal rationale (commercial interest, operational support, group interest); (4) any clauses (return to better fortune). Since the ruling of 17 June 2024, the documentary stake has shifted: it now concerns corporate income tax, not payroll tax.
VAT framework and its impact on payroll tax.
Voir la page Payroll taxSectorisation and payroll-tax neutralisation for VAT groups.
Voir la page VATMonthly return and calculation of the liability ratio.
Voir la page LitigationProcedure and defence where payroll tax is challenged.
Voir la pageA confidential first exchange to classify the transaction, secure its booking and defend its exclusion from the payroll-tax calculation in the event of an audit.
© BENSAID Avocats — The information on this site does not constitute legal advice and cannot replace a personalised tax analysis.
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