The tax liability of an undisputed ICI when it does not carry out any commercial transactions for one year

An ICS that engages in merchanting transactions is subject to the SI in accordance with the provisions of Article 35 of the CGI.

In order to qualify the activity as a merchant of goods, case law uses two criteria: the speculative intention which is assessed at the time of purchase of the goods and the habitual nature of the resale purchase transactions (CE 3° et 8° ssr., 19 November 2008, n° 291039). 

The condition of habituality is assessed in principle according to the number of transactions carried out and their frequency.

In a judgment of 18 March, the Conseil d'Etat ruled that the fact that during a given year no transaction referred to in Article 35 of the General Tax Code has been carried out by a non-trading company is not sufficient, in itself, to rule out the application of these provisions for that year, and thus the liability to corporate income tax (CE, 18 March 2020, no. 425443).

This case law ensures the stability of the status of SCIs engaged in an activity as a merchant of goods and prevents the retroactive emergence of the taxes associated with the cessation of this activity.