This is of interest for several reasons, both to onshore and offshore trustees,
The first is that the French tax administration has obstinately been holding to a fiction that a trust is a form of corporate or quasi-corporate vehicle or organisme, despite it having none of the identifiers under French law to support such a proposition. The Court d’appel administratif de Paris has confirmed that in the case of a Bermudan irrevocable and discretionary trust that approach is wrong. That is of interest not only in the income tax area of article 123 bis CGI, but also potentially int he 3% annual tax in area property holding entities which will become of increasing interest after the end of the Implementation Period post Brexit.
The second is that the Court held that as the “instruction” or preparatory dossier disclosed that the trusts had been constituted whilst the settlor was not resident in France, there was no evidence of evasion of French tax, and even so, the reasons for their constitution were clearly non-fiscal. However the decision is in the area of income tax and anti avoidance mechanisms relating to that tax, not in the area of gift or estate duty or the Impôt sur la fortune immobilière.
However, note that there is an increasing tendency in the French administrative courts to treat trusts as a form of individual which means that there may be questions as to whether the French administration will start to expand the definition of a connected person and treat them a a vehicle akin to a personne interposée for CGT purposes which, to date, they should not have not been.
For a further summary and the link to the French judgment see here