Concept of “hidden activity”

A Spanish company which carried out an economic activity in France did not complete any administrative procedures (no declaration of the activity to the “centre of formalities” for businesses, or to the registry of the commercial court, and no tax return submitted within the relevant deadlines). The tax authorities issued assessments for corporation tax and VAT along with penalties for “hidden activity”.

The Conseil d’Etat considered that a “hidden activity” exists if a taxpayer has not submitted a tax return and has not made the activity known to a centre of formalities or to the registry of the commercial court. In such a case, the tax authorities are deemed to have established the presence of a hidden activity if the taxpayer is not able to show that it made an error justifying the fact that it did not comply with any of its obligations. In this respect, if the taxpayer can demonstrate that it complied with all of its tax obligations in another Member State, the justification of the error made must be analysed by taking into account the level of taxation in that other Member State and the arrangements for the exchange of information between the tax authorities of the two Member States.

Michel Guichard

Michel Guichard, Partner, leads the Indirect Tax activity. With more than 30 years’ experience in International and French Tax law, he advises his clients on indirect tax matters. Michel is […]

Odile Courjon

Odile Courjon, Partner, has developed a strong expertise in indirect tax issues (VAT, wage taxes, excise taxes, export control and customs) in France and overseas. She advises her clients in […]

Bertrand Jeannin

Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT and customs policies. Major focuses of Bertrand’s input involve the […]

William Stemmer

William Stemmer, Partner, has more than 15 years’ experience in Indirect Tax matters. William particularly specializes in the real estate and financial sectors. William is a lecturer at the University […]

Anne Gerometta

Anne, Director, has been advising companies on indirect tax issues for more than 15 years. Anne has developed a specific expertise on the manufacturing sector (VAT, customs and Export Control) […]