Since the 19th century, the scope of state liability has gradually increased, evolving from cases involving “exceptionally serious” misconduct to those involving simple misconduct.

Only actions for breach of equality before public charges, under the law, constitute a no-fault liability regime (CE, ass. January 14, 1938, No. 51704, SA des produits laitiers “La Fleurette”).

Due to the ‘exception de recours parallèle’ (parallel litigation exception), liability actions seeking compensation solely for damages resulting from tax payments are inadmissible as they have the same purpose as tax proceedings (CE, 5 July 1996, No. 150398, SCI Saint-Michel: Dr. fisc. 1996, No. 52, comm. 1574).

However, as this exception only applies to claims for compensation for damages resulting from the payment of French tax, for which the tax claim procedure is open in France (CE, 21 November 2016, No. 38815, Lominé), it does not apply in case of foreign taxation (CE, 2 June 2025, No. 491270, B: Dr. fisc. 2025, No. 36, comm. 277).

I – TERMS AND CONDITIONS OF LIABILITY

State liability can only be engaged if there has been a fault, except in legislative matters, where the judge does not have jurisdiction to characterize a fault in respect of the principle of separation of powers.

An action based on the state’s liability for violation of the principle of equality before public charges imposed by law is an action that can be admitted without proof of fault as “the judge cannot base the State’s liability on a fault committed by the legislator, because in doing so, he would have to make a value judgement on legislative activity and would thus disregard the sovereignty of the legislative power. (CAA Paris, 23 December 2022, No. 21PA00542, SA Bouygues: Dr. Fisc. 2023, No. 11-12, comm. 130).

The Conseil d’État (French administrative supreme court) has clarified that the State may be held liable under the law in the event of a violation of the general principles of European Union law (CE, 23 July 2014, No. 354365, Sté d’éditions et de protection route ‘SEPR’). However, except in cases where individuals have suffered damage as a result of a clear violation of EU law by a final decision of a national court, action for state liability cannot call a judicial decision into question, except through legal proceedings (Court of Cassation, 18 November 2020, Crescioni, cited above).

Since the ‘Gardelieu’ ruling (CE, Ass., 8 February 2007, No. 279522, Gardelieu: RJF 5/2007, No. 606), liability arising from unconventional laws, which engages the responsibility of the State due to France’s failure to comply with its international obligations, has also been recognized. This is insofar as the legitimate expectation of being able to obtain reimbursement of sums paid under regulations recognized to be contrary to EU law is considered as a financial asset and therefore constitutes ‘property’ within the meaning of Article 1 of the First Additional Protocol to the European Convention on Human Rights (ECHR, 16 April 2002, No. 36677/97, SA Dangeville v. France: RJF 7/2002, No. 889; CE, 19 Nov. 2008, No. 292948, Sté Gétécom: Dr. Fisc. 2009, No. 6, comm. 179, concl. N. Escaut).

The State may be held liable if a court ruling is vitiated by a manifest breach of EU law. To assess whether the content of a court decision violates EU law, the administrative judge must, in accordance with the case law of the CJEU (CJEU, 30 September 2003, C-224/01, Köbler: RJF 2003, No. 1464), take into account all the factors characterizing the situation, in particular the degree of clarity and precision of the legislative provision concerned, the scope of its margin of appreciation, whether the breach or damage was intentional or unintentional, and whether the legal mistake was excusable or inexcusable (CE, 1 April 2022, No. 443882, Sté Kermadec: Dr. fisc. 2023, No. 9, comm. 117).

The Conseil d’État has completed its precedents by recognizing a new case of state liability due to unconstitutional laws (CE, Ass., 24 December 2019, No. 425983, Sté hôtelière Paris Eiffel Suffren; CE, Ass., 24 December 2019, No. 428162).

In the context of liability for fault, the judge first replaced the requirement of “exceptionally serious” misconduct with that of “gross fault” in order to hold the state liable for faults committed by the tax authorities in connection with tax assessment and collection operations (CE, sect. 21 December 1962, Dame Husson-Chiffre: Lebon, p. 248).

Any deficiency characterized by an act or series of acts demonstrating the public justice service’s inability to fulfil its mission or a denial of justice constitutes “gross fault” for which the State is liable (Cass. Ass. Plén., 23 February 2001, No. 99-16165; Cass., 18 November 2020, no. 711 FS-P+B). The State is thus obliged to compensate for damage caused by defective public justice service functioning, including preparatory acts for judicial decisions and enforcement acts, in addition to the judicial function itself.

In tax cases, the French Conseil d’État recognized for the first time in its ‘Bourgeois’ ruling that the State could be held liable on the basis of simple negligence, initially only for claims relating to tax payments that did not involve difficulties in assessing the taxable base (CE, Section, 27 July 1990, No. 44676, Bourgeois: Dr. Fisc. 1990, No. 40, comm. 1778).

In 2011, the Council of State abandoned the requirement of gross fault in matters of State liability for misconduct by its tax authorities. Since the ‘Krupa’ ruling, simple misconduct has been sufficient to engage this liability when carrying out operations related to tax assessment and collection procedures. This applies to both the taxpayer himself and any person who has suffered special damage (CE Section, 21 March 2011, No. 306225, Krupa: Dr. Fisc. 2011, No. 13, comm. 109).

The ‘Krupa’ ruling by the Council of State has extended liability for simple fault attributable to the tax authorities, which should lead to more flexible conditions for compensating victims of the tax authorities (see the article by Simon RIO: ‘Assessment of the conditions for engaging the liability of the tax authorities since the Krupa decision’: Dr. Fisc. 2022, No. 47, comm. 400).

II – CAUSALITY AND COMPENSATION TERMS

Generally, liability is only incurred if the alleged damage is linked to the fault established by a definite causal link. The ‘direct’ nature of the causal link between the fault of the tax authorities and the damage suffered must be demonstrated by the claimant as the State’s liability is conditional upon direct damage by the tax authorities to the claimant (see CE, 21 March 2011, Krupa, cited above).

It should be noted that the former jurisprudential “exception de recours parallèle” (parallel litigation exception), does not systematically preclude liability proceedings.

The definitive status of taxation does not render a claim for compensation inadmissible if it is brought by a taxpayer seeking a sum equivalent to tax, but not of the same nature (e.g. loss of earnings or compensation for commercial and financial damage attributable to wrongful acts by the tax authorities) (CE, 5 July 1996, No. 150398, SCI Saint-Michel: Dr. Fisc. 1996, No. 52, comm. 1574). It has been accepted that a municipality could thus obtain budgetary compensation from the State corresponding to a tax resource of which it was unlawfully deprived.

While compensation cannot, in principle, be equated with the amount of a tax, it has been accepted that compensation may cover a definitive foreign tax incurred due to a delay in issuing an administrative document that the tax authorities were objectively required to issue within a reasonable timeframe (CE, 2 June 2025, No. 491270, cited above).

In this decision, the Conseil d’État recognized for the first time the State’s liability for damage resulting from the payment of foreign tax due to an error committed by the French tax authorities. The taxpayer, who was resident in France for tax purposes, had been subject to a withholding tax of 35% on dividends from Swiss sources in Switzerland, whereas under the provisions of the Franco-Swiss Tax Convention of 9 September 1966, the tax rate should have been limited to 15%. To obtain a reimbursement of the tax differential from the Swiss tax authorities, the taxpayer had to submit a certificate attesting his status as a tax resident subject to French direct taxes within a period of three years, in accordance with Article 31 of the bilateral Convention. However, as this certificate was only issued after the three-year period had expired under Swiss legislation, the taxpayer was unable to obtain the refund.

In conclusion, since the generalization of the simple fault that can engage the State’s responsibility has led to a wider acceptance of errors in the assessment and collection of taxes of all kinds, as well as in the formalities and issuance of documents that the tax authorities are required to provide to taxpayers. Collective actions should also be more widely accepted, particularly in cases brought by groups or associations of taxpayers.