Trusts: The Conseil d’État Sends a Clear Signal

Without solid evidence, a payment will be treated as taxable income.

In its decision of 13 March 2026, No. 500318, Lebel, the Conseil d’État confirms a highly demanding approach to the taxation of trusts.

The case

A French taxpayer had received several payments from an irrevocable Canadian trust between 2009 and 2011.

Her defence was a classic one: these were not income, but capital.

She did not persuade the court.

The ruling

The Conseil d’État upholds the taxation on the basis of Article 120, 9° of the French General Tax Code and delivers a very clear message:

It is not for the tax authorities to demonstrate that the sums are taxable; it is for the taxpayer to prove that they do not constitute distributed income.

In other words: in trust matters, the capital argument is worthless without traceability.

An additional contribution

The ruling also provides another significant clarification: even before the 2011 reform, the income of a trust could only be taxed if the taxpayer had effective disposal of it.

The takeaway

In practice, what must be remembered is straightforward:

• No reliable accounting
• No precise supporting documentation
• No convincing demonstration

= Taxation.

A decision that usefully reminds us that, in trust cases, the central issue is not only the tax classification of flows, but the ability to prove it.