France vs Engie SA, May 2026, Conseil d’État, Case No 496874 (ECLI:FR:CECHR:2026:496874.20260507)
Table of Contents
Case Information
Court: Conseil d'État (8ème – 3ème chambres réunies)
Case number: 496874
Citation: ECLI:FR:CECHR:2026:496874.20260507
Applicant: Ministre de l'économie, des finances et de la souveraineté industrielle et numérique
Respondent: Société anonyme Engie (formerly GDF Suez)
Jurisdiction: France
Judgment date: 7 May 2026
Judgment Summary
The Conseil d'État, sitting in its 8th and 3rd chambers combined, delivered judgment on 7 May 2026, dismissing the cassation appeal brought by the Minister of the Economy, Finance and Industrial and Digital Sovereignty against articles 2, 3 and 5 of the judgment of the Paris Administrative Court of Appeal (Cour administrative d'appel de Paris) of 27 June 2024.
The case concerned transfer pricing adjustments made by the French tax administration in respect of services provided by GDF Suez (now Engie) to two subsidiaries under a pooled single-voice arrangement for the purchase, transport and sale of liquefied natural gas (LNG) on the spot market, covering the tax years 2011 to 2014 [§1].
The Conseil d'État found that the Court of Appeal had not erred in law or distorted the evidence before it, and that the administration had not discharged its burden of proving an indirect transfer of profits within the meaning of Article 57 of the Code général des impôts (CGI) [§7, §9].
The State was ordered to pay Engie the sum of 3 000 euros under Article L. 761-1 of the Code de justice administrative [§10].
Background
GDF Suez, which became Engie, organised a pooled single-voice ("single voice") arrangement with its US-law subsidiary GDF Suez Gas North America LLC (GSGNA) and its Luxembourg-law subsidiary GDF Suez LNG Supply SA (GSLS) for the purchase, transport and sale of volumes of LNG [§1].
This arrangement relied on long-term supply contracts and medium- and long-term sale contracts held by each of the three entities. It was formalised by a contractual package comprising: a scheduling service contract relating to the organisation and monitoring of LNG loading, unloading and transport; a shipping service contract relating to the maintenance, repair and compliance of the LNG tanker fleet; and a cargo purchase and sale service contract covering spot-market buy and sell transactions [§1].
Under these contracts, GDF Suez acted as the sole interlocutor for all three entities and was to be remunerated on the basis of its cost price increased by a margin of 10% [§1].
Following audits covering the period 1 January 2011 to 31 December 2014, the tax administration considered that the prices invoiced by GDF Suez to its subsidiaries were below arm's length prices, and that GDF Suez had made an indirect transfer of profits to its subsidiaries. It reassessed GDF Suez's taxable results under Article 57 CGI and also characterised the corresponding benefits as hidden distributions under Article 111(c) CGI, subject to withholding tax under Article 119 bis 2 CGI, and as undeclared income to be reintegrated into the VAT base [§1].
Engie challenged the resulting supplementary assessments before the Tribunal administratif de Montreuil, which rejected its claims in a judgment of 14 January 2021 (no. 1812789) in the first set of proceedings and, in a judgment of 25 July 2022 (no. 1910220), granted partial relief limited to the reduction of the assessment base for the 2014 tax year in the second set of proceedings [§1, page 1].
On appeal, the Paris Administrative Court of Appeal, by judgments nos. 21PA01277 and 22PA04298 of 27 June 2024, joined the two sets of proceedings and, after noting a partial non-suit on account of interim partial relief and the retrospective reinstatement of part of the deficits, reduced the assessment bases for corporation tax, additional contributions, the company VAT levy and the additional tax on that levy assigned to GDF Suez for tax years 2011, 2012, 2013 and 2014, granted the corresponding discharge, pronounced partial discharge of the withholding tax claims for 2012, 2013 and 2014 and the related penalties, amended the lower court judgments to that extent, and rejected the remainder of the appeal [§1, page 1].
The Minister then lodged a cassation appeal with the Conseil d'État, registered on 12 August 2024, with a supplementary brief registered on 4 November 2024, seeking annulment of articles 2, 3 and 5 of the Court of Appeal's judgment [§1, page 1].
Core Dispute
The central issue was whether, under Article 57 CGI (applicable to corporation tax by virtue of Article 209 CGI), GDF Suez had transferred profits indirectly to its subsidiaries GSGNA and GSLS by pricing its single-voice services at a level below arm's length [§2].
The administration's position was that the 10% margin on cost applied by GDF Suez did not constitute arm's length remuneration for the activities actually carried out, because the arrangement relied on a unique high-value asset consisting of the standardised framework contracts concluded by GDF Suez, and that remuneration should have been determined using a transactional profit-split method, applying a 50/50 margin-sharing principle derived from diversion clauses in the long-term supply contracts and from correspondence between GDF Suez and its subsidiaries dated 13 June 2008 and 30 April 2010 [§3].
Engie contested that characterisation and argued that the administration had not established either the existence of the alleged unique asset or an unjustified price gap [§4, §5, §7].
Court Findings
The Conseil d'État first set out the legal framework under Article 57 CGI [§2]. Where an entity establishes that it has made comparisons, the burden shifts to the administration to demonstrate the existence of an unjustified gap between the agreed price and the arm's length value of the goods transferred or services rendered. Without such comparisons, the administration can rely on the presumption of profit transfer created by the statute, but must still establish an unjustified price gap [§2].
On the facts, the Conseil d'État found that the Court of Appeal had carried out a sovereign factual assessment, free from distortion, when it concluded that, contrary to the tax inspector's view, the activity corresponding to the single-voice function did not mobilise any strategic function and did not rest principally on a unique high-value asset, and that GDF Suez's responsibility in this arrangement did not exceed that which a specialist broker in the LNG transport sector could assume [§5].
Regarding the comparables relied upon by the administration, the Conseil d'État held that the Court of Appeal had not distorted the evidence when it found that the profit-sharing between the two parties to a supply contract resulting from a diversion operation, and the distribution of the additional profit generated by a spot-market buy or sell transaction, presented such differences in subject matter, context and parties that the former could not serve as a reference for the latter [§6].
The Conseil d'État therefore confirmed that the Court of Appeal had not erred in law in holding that the administration, which had not compared the prices invoiced by GDF Suez to its subsidiaries with those that would have resulted from applying a transactional profit-split method based on a 50/50 margin-sharing principle that it had justified only by reference to the diversion clauses, had not proved the indirect transfer of profits to GDF Suez's US and Luxembourg subsidiaries [§7].
The mere fact that the method retained by a company to price its services to a foreign subsidiary may not be the most appropriate, or may not be the best adapted to the functions exercised, is not sufficient, the court confirmed, to establish such proof, and does not demonstrate the existence of a gap from the arm's length price in the absence of a determination by the administration of the arm's length price based on relevant parameters [§7].
On a subsidiary point, the Conseil d'État noted a clerical error in the Court of Appeal's judgment: article 5 of the operative part and paragraph 16 of the reasoning referred to a withholding tax discharge of 1 051 181 euros instead of 1 050 181 euros. The court rectified this error in its own decision. It rejected the related ground of appeal that the Court of Appeal had ruled ultra petita by granting discharge of 1 051 181 euros when only 1 050 181 euros had been claimed [§8].
Outcome
Article 1: The Minister's cassation appeal is rejected.
Article 2: Article 5 of the Court of Appeal's judgment of 27 June 2024 is rectified to read 1 050 181 euros in place of 1 051 181 euros, in accordance with the reasoning at paragraph 8 of the present decision.
Article 3: The State is ordered to pay Engie the sum of 3 000 euros under Article L. 761-1 of the Code de justice administrative.
Article 4: The decision is to be notified to the Minister in charge of public accounts and to the société anonyme Engie.
TP Method Highlighted
The tax administration applied a transactional profit-split method to determine the arm's length remuneration for GDF Suez's single-voice services, proposing a 50/50 margin-sharing principle. It derived this benchmark from diversion clauses in the long-term LNG supply contracts concluded between GDF Suez and Egyptian General Petroleum Corporation, BG Delta Limited and PICL Egypt Corporation, and from correspondence between GDF Suez and its US and Luxembourg subsidiaries dated 13 June 2008 and 30 April 2010, which provided for equal sharing of any additional profit arising from the diversion of a cargo to a buyer in a different geographic zone from the initial purchaser [§3].
GDF Suez had itself applied a cost-plus method, pricing its services at cost of production increased by a margin of 10% [§1].
The Conseil d'État confirmed the Court of Appeal's finding that the administration's proposed comparables, being profit-sharing provisions in long-term supply contracts relating to diversion operations, differed sufficiently in subject matter, context and parties from spot-market transactions that they could not serve as a valid reference for determining the arm's length price of the single-voice services [§6, §7].
Major Issues / Areas of Contention
- Whether GDF Suez transferred profits indirectly to its subsidiaries GSGNA and GSLS within the meaning of Article 57 CGI by pricing single-voice LNG services at a 10% cost-plus margin.
- Whether the tax administration discharged the burden of proving an unjustified gap between the price invoiced and the arm's length value of the services, given that it relied solely on diversion clause comparables from long-term supply contracts.
- Whether the single-voice arrangement rested principally on a unique high-value asset consisting of standardised framework contracts held by GDF Suez, which would have warranted a higher level of remuneration under a profit-split approach.
- Whether the diversion clause profit-sharing provisions in the long-term supply contracts constituted valid comparables for pricing spot-market buy and sell services, given differences in subject matter, context and parties.
- Whether the fact that the cost-plus method adopted by GDF Suez was not the most appropriate method was, by itself, sufficient to establish an indirect transfer of profits in the absence of the administration determining the arm's length price on the basis of relevant parameters.
- Whether the Court of Appeal ruled ultra petita by granting discharge of 1 051 181 euros in withholding tax when only 1 050 181 euros had been claimed, and whether this resulted from a clerical error requiring rectification.