Tax Authorities Update Their Position On Wrongly Invoiced VAT

In a new publication dated January 8, 2025, the tax authorities have clarified the conditions and procedures for adjusting wrongly invoiced VAT. In so doing, the tax authorities have drawn the consequences of the case law of the Court of Justice of the European Union and the Conseil d'Etat in this area.

As a reminder, article 283, 3 of the French General Tax Code ("CGI") stipulates that the person who mentions VAT on an invoice is liable for the tax by this mention alone, even if the tax is mentioned in an erroneous or abusive manner.

• Terms and conditions for adjusting wrongly invoiced VAT

Invoice issuers have the option of adjusting incorrectly invoiced VAT, under the new conditions set out below:

1. In order to regularize VAT with the tax authorities, a rectifying invoice must first be issued to the customer¹.
2. VAT must be settled no later than December 31 of the second year following payment of the tax².
3. If the tax authorities call into question the deductibility of VAT, this event constitutes a "new event" which opens up a new claim period for the supplier, running until December 31 of the second year following the year in which the event occurred. This period is used to rectify erroneous invoices and, where applicable, to regularize the deduction made by the recipient³.

• Refund of unduly invoiced VAT to the purchaser

The tax authorities add that, in order to obtain a refund of the VAT wrongly invoiced, the purchaser must, as a matter of priority " including, where appropriate, through the courts ", apply to the supplier if the latter has not taken the initiative of refunding the corresponding undue tax, and, as a subsidiary option only, to the tax authorities if it is impossible or excessively difficult to obtain a refund from the supplier⁴.

Impossible or excessively difficult restitution means the supplier's insolvency. The tax authorities refer here to Community case law, citing the opening of bankruptcy proceedings, judicial liquidation or the statute of limitations on any civil action.

However, the tax authorities do not specify the time limit within which the purchaser must bring an action for recovery of undue payment. Future comments from the tax authorities on this point are therefore awaited.

Footnotes

1. BOI-TVA-DECLA-30-20-20-30-20250108 §380

2. BOI-TVA-DECLA-30-20-20-30-20250108 §410 refers to article R. 196-1 of the LPF.

3. BOI-TVA-DECLA-30-20-20-30-20250108 §410

4. BOI-TVA-DED-40-10-10 §60

Originally published 30 January 2025

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