Business taxation & VAT

The main risk is a reassessment together with penalties of between 10% and 100% and late-payment interest (0.2% per month, i.e. 2.4% per year). The main grounds for VAT reassessment concern deductibility, territoriality rules (intra-Community, exports), mandatory mentions on invoices and the characterisation of operations. Support from the outset of the audit helps secure positions and negotiate the disputed points.

The VAT group (or "single taxable person"), operational since 2023, allows several undertakings that are financially, economically and organisationally linked to form a single taxable person. Intra-group operations fall outside the scope of VAT, which simplifies management and reduces residual VAT. Optimising it requires a prior simulation, a precise definition of the perimeter and an analysis of the deduction coefficients. The election is irrevocable for 3 years.

A real-estate-predominant company (SPI) is a company whose assets are principally made up of buildings or rights relating to buildings. This status triggers specific rules: registration duties of 5% on the transfer of shares (instead of the reduced rate), taxation of gains as real-estate capital gains (Tax Code art. 244 bis A for non-residents), inclusion in the IFI base, and specific reporting obligations.

No. The margin-scheme VAT applies only to certain operations, in particular where the dealer had no right to deduct at the time of the initial acquisition. It requires an analysis of the tax regime of the acquisition and of the nature of the operation (building land, existing building, new building). CJEU case law (in particular the Icade Promotion ruling) has clarified the conditions of application — see our real-estate taxation practice.

Preparation rests on several lines of action: (i) checking the consistency of tax and accounting returns; (ii) documenting the special regimes and the elections made; (iii) keeping up to date the FEC (accounting-entries file), the reliable audit trail for VAT, the IFU and the DAS 2; (iv) archiving supporting documents and material evidence; (v) anticipating sensitive points through an internal audit or a ruling. A tax lawyer can also manage the interaction with the tax authorities.

Several avenues of appeal exist: (i) observations in response to the reassessment proposal (30 days, extendable); (ii) hierarchical appeal to the auditor's superior, then to the departmental interlocutor; (iii) referral to the tax commissions (commission for direct taxes and turnover taxes, tax-abuse committee); (iv) litigation claim after the tax is put into recovery; (v) referral to the administrative court, then appeal and cassation. A payment deferral may be requested to suspend recovery.

Tax consolidation (Tax Code art. 223 A et seq.) allows a group of companies held at least 95% by the parent company to consolidate its taxable results — offsetting of profits and losses, neutralisation of intra-group flows, consolidated management of CIT. The election lasts 5 years, renewable, and requires the parent and the subsidiaries to be subject to CIT in France. Leaving the regime has tax consequences that must be anticipated.

Recovering VAT borne abroad depends on the country of the company's seat and the country where the VAT was borne. For companies established in the EU, the procedure goes through the 9^th directive (national electronic portal, filing with the tax authorities of the seat). For companies outside the EU, the 13^th directive applies — with a possible obligation to appoint a fiscal representative depending on the country of refund.