Can tax risk insurance replace a French tax ruling?

A ruling binds the tax authorities on your factual situation

The first paragraph of article L. 80 A of the LPF bars the tax authorities from reassessing earlier taxes by contradicting an interpretation they had formally accepted. Point 1° of article L. 80 B extends that guarantee to cases where the tax authorities have "formally taken a position on the assessment of a factual situation in the light of a tax provision", on a written, precise and complete request from a taxpayer acting in good faith, with an answer within three months: this is the general ruling (in French, all texts).

• Only an express answer binds the tax authorities for the general ruling: their silence beyond three months is not approval (BOI-SJ-RES-10-20-10, para. 350).
• All taxes governed by the French Tax Code are covered, including registration duties and the 3% tax (same BOI, para. 30). The guarantee only applies against a reassessment, not against an original assessment (paras. 20 and 360).
• The situation must remain strictly identical to the one described, and the taxpayer must meet every condition set out in the answer (paras. 220 and 390).
• The tax authorities may withdraw their position, but only for the future: the earlier assessment lapses only from the day the taxpayer is notified of the change. A change in the law ends the guarantee as soon as it enters into force; a change in doctrine or case law, from its publication by the tax authorities (paras. 410 to 440).
• A second review may be requested within two months of the answer, without new facts; a panel, which may hear the taxpayer, decides under the same rules and time limits (LPF, art. L. 80 CB). It is available for points 1° to 6°, 8° and 13° of article L. 80 B, for article L. 80 C and, where no agreement on a value has been reached, for article L. 18.

Several specific rulings bear directly on real estate

For several specific rulings under article L. 80 B, the guarantee is obtained if the tax authorities have not answered within the statutory time limit. Four of them recur in real-estate transactions.

• Non-trading company (société civile): income tax or corporate tax (8°). A société civile may ask which of the two applies to the profits of its business activity; three months.
• Permanent establishment (6°). A non-resident may ask for confirmation that it has no permanent establishment in France within the meaning of the applicable tax treaty; three months.
• Development tax (13°). For a project of more than 50,000 square metres of taxable floor area, before the application for authorisation; reasoned answer within three months.
• Restructuring of property companies (9° and 9° bis). Before a merger, a demerger, a partial transfer of assets or a transaction exposed to article 205 A of the French Tax Code, confirmation that the anti-abuse clauses do not apply is obtained if no answer is given within six months.

An exemption from the 3% tax, the registration duties on a sale of shares or the VAT on a property transfer fall under the general ruling, with an express answer. See our pages on the French tax ruling and real-estate taxation.

A tax risk policy indemnifies a loss, within the limits of the contract

The policy covers the financial consequences of a reassessment of an identified tax position, taken on an acquisition or a restructuring. No specific statutory regime governs it: everything depends on the contract, whose clauses below should be read before signing.

• A described position. Only the risk set out in the contract is covered, usually on the basis of an adviser's written analysis; a reassessment on other grounds is not.
• Exclusions. Facts known to the insured before inception, fraud and, for a policy governed by French law, intentional or fraudulent misconduct (Insurance Code, art. L. 113-1) are excluded. Later changes in the law are often excluded. Cover for late-payment interest and penalties varies from one policy to another.
• A cap and a retention, which leave part of the risk with the insured.
• Disclosure obligations. The insured must answer the insurer's questions accurately, report new circumstances that increase the risk within fifteen days of becoming aware of them, and notify the insurer of any claim within the contractual time limit (art. L. 113-2). An intentional misrepresentation renders the contract void (art. L. 113-8); an omission in good faith discovered after the claim reduces the indemnity proportionately (art. L. 113-9).
• Conduct of the audit. Policies generally make any settlement with the tax authorities subject to the insurer's consent.

Against abuse of law, only prior consultation protects the transaction

Article L. 64 of the LPF allows the tax authorities to disregard sham acts and acts which, seeking the benefit of a literal application of texts contrary to the objectives pursued by their authors, could have had no other motive than to avoid or reduce tax; article L. 64 A applies the same test of conflict with the objectives of the texts, subject to article 205 A of the French Tax Code, where the tax motive is merely the main one. In the first case, the penalty is 80%, reduced to 40% where the taxpayer neither had the main initiative for the acts nor was their main beneficiary (French Tax Code, art. 1729).

Article L. 64 B rules out both procedures where the taxpayer, "before entering into one or more acts, has consulted the central administration in writing, providing it with all useful information", and the central administration has not answered within six months. The text covers only these two procedures: a reassessment on other grounds remains possible (BOI-SJ-RES-10-20-20-80, para. 140).

A policy does not prevent the tax authorities from initiating the procedure, and a transaction with an exclusively tax motive runs into the usual exclusions. See our page on abuse of law.

The ruling and the policy are combined when the timetable or the scope requires it

• Timetable. If signing cannot wait, the policy covers the interval. The general ruling can still be issued before the filing deadline expires (BOI-SJ-RES-10-20-10, para. 100); the article L. 64 B ruling must precede the acts.
• The past of an acquired company. A ruling only protects taxes returned after the position was taken, and only the taxpayer who obtained it or took part in the transaction (BOI-SJ-RES-10-20-10, paras. 100 and 120). Past years of a target company fall under the tax indemnity in the purchase agreement and, where appropriate, a policy.
• Matters outside the tax provision. Procedure, collection and penalties are not "tax provisions" for the purposes of a ruling (BOI-SJ-RES-10-20-10, para. 240).
• Order of steps. An unfavourable ruling is reported to the insurer where the policy so requires or where it is a new circumstance that increases the risk and makes the answers already given to the insurer inaccurate; in the latter case, it is reported by registered letter within fifteen days (Insurance Code, art. L. 113-2, 3°).
• Returns. Neither releases you from the returns due, such as form no. 2746-SD filed by those liable to the French 3% tax and by entities exempt under points d or e of 3° of article 990 E.

Four decisions set the scope of a formal position

• A ruling is a decision. The formal position can be challenged by an action for annulment only if it has significant non-tax effects, which is presumed for unfavourable answers to rulings under points 2° to 6° and 8° of article L. 80 B and under article L. 80 C; the action then requires the prior second review under article L. 80 CB, whose answer replaces the first (Conseil d'État, Section, 2 December 2016, no. 387613, Export Press; in French).
• A cautious answer does not bind. A letter that suggests a classification while leaving it to the taxpayer to decide is not a formal position (Conseil d'État, 29 December 2004, no. 255831; in French).
• Withdrawal of a favourable position. The same rules apply against a decision reversing a favourable position; the presumption of significant effects requires a request made before the transaction (Conseil d'État, 2 June 2025, no. 493848, mentioned in the Lebon tables; in French).
• Revocation for the future. The tax authorities may revisit a ruling for the future where they consider its conditions unmet, and the four-month rule of the Code on relations between the public and the administration does not prevent it (Toulouse Administrative Court of Appeal, 6 November 2025, no. 23TL02624; in French).