VAT refund claim: in which circumstances a VAT credit denied by the FTA may be carried-forward on a further return?

In 2007, a company applied for a VAT refund claim. Further to a tax audit, the FTA rejected this claim in 2008. The company did not challenge this decision and carried-forward the corresponding credit on a further return. During a second tax audit, the FTA questioned, in 2011, the carry-forward of the VAT credit. However, the company did not introduce the file before the administrative court and once again, carried-forward the VAT credit on its February 2012 VAT return. Further to a third tax audit, in 2012, the FTA rejected the VAT refund claim.

The French Administrative Supreme Court considers that in such a case, the FTA’s first decision to reject the VAT credit is definitive. Therefore, the company could not carry-forward this VAT credit and introduce a new VAT refund claim.

However, this decision needs to be put into perspective with the French Administrative Supreme Court case, Sodinel (December 28th, 2005, No 263982). In this specific case, the FTA rejected the VAT refund claim since the company did not provide the supporting documents (formal condition not respected). The French Administrative Supreme Court considered that the taxpayer may carry-forward the VAT credit and introduce a new VAT refund claim within the statute of limitations.

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 […]