A professional sportsperson has played in France for four years. Their image rights are held in an Andorran company that collects the royalties paid by their sponsors. The structure was presented to them as safe. It has not been safe since 2024, and the risk does not concern the future alone: it reaches back over the years already elapsed. The Andorran company itself can be called upon to pay their French tax debt.
No, not under the conditions in which it used to work. The structure of holding the image rights of a sportsperson established in France in a foreign company, so as to keep the royalties out of French tax, rested on a drafting gap that the 2024 Finance Act has closed. What was once defensible is now presumed taxable in France, and those who set the structure up before 2024 are exposed over past years as much as over future ones.
Technically, they can. But since 1 January 2024, the arrangement brings the sportsperson within the scope of article 155 A of the French Tax Code in almost every case.
This provision is an anti-avoidance mechanism. It allows the French tax authorities to tax, in the name of a person established in France, the sums that a foreign company collects in their place. Originally designed for services rendered, it targeted the sportsperson or artist who had an offshore structure invoice for a performance they themselves carried out.
The image structure slipped through a gap. The licensing of an image right did not present itself exactly as a service rendered, but as the exploitation of an intangible asset owned by the company. By transferring their rights to their foreign structure beforehand, the sportsperson could argue that the royalties no longer paid for any service on their part. The argument took the structure outside the provision.
It rewrote the scope of article 155 A to target expressly the commercial exploitation of the rights attached to a person's image, name or voice.
The provision no longer hinges on the notion of a service rendered, but on that of a licence of rights. The shift is decisive: it no longer matters that the sportsperson transferred their image to their company, since as soon as that company exploits it commercially, taxation shifts to France. The argument of the prior transfer, on which the structure relied, has lost its foundation.
The administrative commentary confirms this beyond doubt. It illustrates the new mechanism with the example of a person who transfers their trademarks and logos to an offshore company whose entire capital they hold, and which then enters into a licence agreement: the royalties, the authorities state, may be taxed in the name of the individual. The very scheme the old provision let through is now cited as a case of application.
These rules apply to income received since 1 January 2024. They do not create a future risk: they already apply to the royalties collected since that date by the structures in place.
Yes, as soon as one of three conditions is met, and the first covers almost every case.
Where the sportsperson controls the foreign company, in law or in fact. A structure whose capital they hold, or whose terms they set alone, is under their control.
Where they do not establish that the company carries on, as its principal activity, a genuine activity other than the collection of these royalties.
And, in any event, where the company is established in a State with a privileged tax regime within the meaning of French tax law, which requires a notably lower level of taxation than in France and is assessed case by case.
The burden of proof turns quickly against the sportsperson. The authorities establish control. It is then for the sportsperson to show that the royalties correspond to a genuine intervention of the foreign company's own. A structure that merely collects and passes the money on has no intervention of its own to point to.
Far more than a tax reassessment for the current year.
The royalties are brought back into their taxable income in France, over the years still open to reassessment, not just the current year. The foreign company that collected them is jointly liable for the tax debt, up to the sums it received: the authorities can turn against the structure itself. Where the beneficiary is not resident, a withholding tax applies. And the whole often takes place within a personal tax audit, whose deadlines and mechanics decide the outcome before the debate on the merits has even begun.
The instinct to unwind the structure in haste is a trap. Restructuring as an audit approaches opens up an abuse-of-law exposure more dangerous still than the original situation. The exit cannot be improvised.
They are, in their relationship with their player. An agent who steered a sportsperson towards a structure now compromised puts at stake the very trust on which the whole relationship rests. On the day the audit lands, it is to them that the player turns first. Checking a player's exposure before it comes to light is as much in the agent's interest as in the sportsperson's.
Two doors remain, and they are narrow. The foreign company can escape the provision if it carries on a genuine and principal activity other than the collection of royalties, or if it brings a value of its own to the exploitation of the image. Both call for real substance abroad, means and an activity that exist somewhere other than on paper. That is exactly what off-the-shelf structures do not have, and such substance cannot be manufactured retrospectively. No one can say alone, from a brochure, on which side of the line their structure falls.
ok It will not tell you whether your foreign company has enough substance to hold up. It will not tell you how to exit an existing structure without triggering abuse of law. It will not tell you how many years back your risk reaches.
The image structure through a foreign company rested on a reading of the provision that the 2024 Finance Act has condemned. Those who set it up beforehand are exposed over the past as much as over the future, with a structure jointly liable for their debt. Finding out which side your situation falls on means having it examined, and doing so before the authorities do it in your place.
The structuring of the image rights of an employed sportsperson within France falls, for its part, under a different framework, that of the French Sports Code, which follows its own rules. That is a separate subject, which I address on its own.
Lobe Law, a Paris law practice specialising in the international taxation of sport, reviews your exposure and secures the structuring of your image rights. Book a consultation.