In a judgment dated 15 January 2026, the Administrative Court of Nice dismissed the claims brought by the US company Imperial Business LLC and confirmed its liability to French corporate income tax and VAT for the years 2011 to 2018.
At the heart of the case lies a consistent principle: tax treatment follows economic reality, not legal or commercial appearances.
From a corporate tax perspective, the Court found that the company operated through a permanent establishment in France within the meaning of the France–US tax treaty. Although incorporated in the United States, the company’s activity was effectively carried out from France, with its key human and material resources located there and the business run from the French home of its sole director and shareholder. This factual reality justified the taxation of profits in France.
The same reasoning was applied for VAT purposes. While the products sold were marketed as food supplements, the Court considered that they qualified as medicinal products by presentation, due to the therapeutic claims associated with their use. As a result, the reduced VAT rate applicable to food products and supplements could not apply.
Furthermore, in the absence of a marketing authorization, the products were also excluded from the reduced VAT rates applicable to medicines. The sales were therefore subject to VAT at the standard rate.
Taken together, this decision sends a clear message to international businesses and entrepreneurs. Whether assessing permanent establishment risks or determining the correct VAT treatment, French courts look beyond formal structures and marketing labels. Where economic substance points to France, tax exposure follows.
