Current-account credits need advance/loan proof for deemed dividends

The administration cannot tax sums credited to a shareholder's current account as deemed distributed income without showing that the money was actually placed at the associate's disposal as an advance, a loan or a down-payment. In a ruling of 21 October 2026Legifrance, the Conseil d'État rejected the public accounts minister's appealLegifrance and upheld the discharge of income-tax and social-contribution reassessments built on bare current-account creditsLegifrance.

The case concerned sums of EUR 19,760 for 2011Legifrance and EUR 30,000 for 2012Legifrance credited to the current-account held by an individual in the books of AA Patrimoine ConsultingLegifrance, which the administration had treated as revenus réputés distribuésLegifrance. The Paris administrative court of appeal had discharged the corresponding reassessmentsLegifrance and refused the minister's request, made before it, to substitute Article 111(a) of the code général des impôts for the original basesLegifrance — Article 109(1°) for 2011 and Article 111(c) for 2012 — on the ground that the administration offered nothing suggesting the credits had been made available as advances, loans or down-paymentsLegifrance.

The Conseil d'État endorsed that analysis on both points. On the substance, the letter of Article 111(a) taxes only sums placed at associates' disposal as advances, loans or down-payments, whether directly or through intermediariesLegifrance; a credit entry on a compte courant d'associé is not enough by itself to trigger the presumption where that characterisation is unprovenLegifrance. The minister's argument — that Article 111(a) presumes any current-account credit to be at the associate's disposal and leaves the burden on the taxpayer — fails where the administration has put forward no evidence of that characterLegifrance.

On procedure, the Court clarified the burden of proof when the administration changes ground mid-case. A taxpayer who accepted a rectification or let the reply deadline pass normally bears the burden of showing the assessment excessive under Article R.194-1 of the livre des procédures fiscalesLegifrance. But that allocation does not apply to a new ground the administration itself raises at any stage of the litigationLegifrance: it is then for the administration to produce whatever material supports the new legal basis it invokesLegifrance.

The minister's pourvoi was rejected in fullLegifrance and the State was ordered to pay the taxpayer EUR 3,000Legifrance under Article L.761-1 of the code de justice administrative.

For pending files, the practical lesson runs both ways: challenge a reassessment resting only on unexplained current-account credits by demanding proof of an advance, loan or down-payment, and where the administration substitutes Article 111(a) for another basis during proceedings, hold it to proving that basis rather than accepting the R.194-1 burden.

The ruling is Conseil d'État, 9th and 10th chambers combined, 21 October 2026, no. 501522, applying Articles 109 and 111 of the code général des impôts, Article R.194-1 of the livre des procédures fiscales and Article L.761-1 of the code de justice administrative.