Tax Litigation, VAT

VAT Litigation Lawyer in France

A VAT assessment is won or lost in the opening thirty days. Upon receipt of the notice of adjustment (LPF articles L.57 and R.*57-1), you have 30 days to respond, renewable for a further 30 days at your request, and any argument omitted at this stage will affect every subsequent stage of the procedure. To the unpaid tax and interest (accruing at 0.20% per month), surcharges of 10%, 40% or 80% are added, frequently pushing the overall exposure for groups under examination into hundreds of thousands or several million euros. The firm represents companies, groups and executives at every stage of VAT disputes, from response to the notice of adjustment through to the Conseil d'État (France's Supreme Administrative Court).

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Reply period
30 days from notice of adjustment, extendable to 60 days on request (LPF L.57, R.*57-1)
Interest on late payment
0.20% per month, or 2.40% per annum (CGI article 1727)
Surcharges
10%, 40% or 80% depending on severity (CGI articles 1728 and 1729)
Statute of limitations
Up to the end of the third year following that in which VAT became due; ten years in case of concealed activity (LPF article L.176)
Remedies
Formal objection, administrative tribunal, administrative court of appeal, Conseil d'État
01

A Dispute Won or Lost in the First Thirty Days

VAT is one of the largest reassessment items in tax audits of businesses. A tax officer who contests your right of deduction, the place of supply of a service, or an omitted self-assessment, reconstructs assessments over a minimum of three years, with interest and surcharges added: for a group, exposure quickly exceeds one million euros.

The procedure follows a strict timetable. At the end of the audit, the tax authority issues a notice of adjustment, motivating every proposed change (LPF article L.57). You have 30 days to lodge your observations, a period extended by a further 30 days if you request it before expiry. Your response to the notice of adjustment is a critical procedural act: it defines the scope of dispute, governs the burden of proof, and shapes all subsequent appeals.

After the tax authority's reply to your observations, the debate continues before hierarchical review bodies and, where applicable, the departmental contact office, then via formal proceedings: formal objection, administrative tribunal, administrative court of appeal, and cassation before the Conseil d'État. Because VAT is a harmonised tax, European Union law and CJEU case law offer specific defences, particularly the principle of neutrality.

The firm limits the number of engagements to ensure partners' direct involvement in each file, and systematically assesses the relevance of an intervention before commitment.

02

Our VAT Litigation Defence Strategies

01

The Most Common Assessment Grounds

Five issues account for the bulk of VAT reassessments notified to businesses.

  • Challenge to the right of deduction: invoices held irregular, expenses disallowed, pro-rata allocation disputes for partly-taxable businesses and mixed-income holding companies
  • Reconstruction of collected VAT: omitted turnover, incorrect rate applied, misaligned chargeable date on service invoices
  • Omitted self-assessment: intra-Community acquisitions, imports, sub-contracted construction work, with the 5% penalty under CGI article 1788 A
  • Place of supply: location of service delivery, VAT establishment, intra-Community transactions and exports claimed zero-rated but contested
  • Incorrectly invoiced VAT: tax due by the sole fact of invoice mention (CGI article 283(3)), undeductible by the recipient, with correction options for the supplier
02

Your Response to the Notice of Adjustment

The decisive moment: each ground must be contested in fact and law.

  • Critical review of the motivation in the notice of adjustment; inadequate reasoning is a procedural defect
  • Request for 30-day extension to 60 days, lodged before the original period expires
  • Production of supporting documents: corrective invoices, proof of physical and financial flows, place of supply documentation
  • Invoking EU law: VAT neutrality, proportionality of penalties, CJEU case law binding on the authority
  • Pursuit of dialogue via hierarchical review and departmental contact before recovery notice
03

Penalties and Interest: Reducing the Bill

Surcharges are debated separately and negotiable to the final stage.

  • Interest on late payment of 0.20% per month, or 2.40% per annum (CGI article 1727), reduced by 30% if you disclose voluntarily during audit (LPF article L.62)
  • Article 1728 surcharges: 10% for late filing, 40% if not filed within 30 days of formal notice, 80% for concealed activity
  • Article 1729 surcharges: 40% for deliberate breach, 80% for fraudulent evasion or abuse of law
  • Contesting the surcharge reasoning and challenging the authority's proof of intent, which it must establish
  • Negotiating a settlement on penalties where formal proceedings no longer offer advantage
04

Statute of Limitations and Prescription

Verifying that each assessment falls within the limitation period is a fundamental defence point.

  • Right to assess extends to the end of the third year following the year in which VAT became due (LPF article L.176)
  • Extended to the end of the tenth year in case of concealed activity, a notion the authority increasingly invokes and which must be challenged
  • Scrutiny of the chargeable date applied to each transaction: cash receipts, debits, intra-Community acquisitions
  • Verification of limitation-breaking acts and correct service of the limitation notice
05

Remedies: From Formal Objection to the Conseil d'État

After recovery notice, the procedure becomes judicial and is litigated.

  • Formal objection, optionally coupled with a stay of collection proceedings (LPF article L.277) and provision of security
  • Application to the administrative tribunal following express or deemed rejection of the objection
  • Appeal to the administrative court of appeal, then cassation to the Conseil d'État
  • Referral to the CJEU where VAT Directive interpretation is in issue
  • Parallel management of criminal prosecution risk for tax fraud where an 80% surcharge applies
06

Recent Cases, Anonymised

Three examples of how structured defence changes the outcome.

  • Real estate group, 1.8 million euros reassessed on deduction rights of an operating holding: reduced to under 350,000 euros after response and hierarchical review
  • International trading company, 950,000 euros VAT reassessed for omitted self-assessment on intra-Community acquisitions: tax allowed under neutrality principle, dispute limited to the 5% penalty
  • Digital services provider, 2.4 million euros reassessed on service place of supply: full relief obtained before the tax tribunal after proof of client establishment
03

Our Approach

The firm handles VAT disputes at every stage: assistance during the tax audit, response to the notice of adjustment, hierarchical review, formal objection and proceedings before the administrative tribunal, court of appeal and Conseil d'État. Defence is grounded in daily practice of group VAT, real estate transactions and international flows, and systematically invokes EU law where the authority's position diverges. Each file receives a value assessment, a roadmap of defences and an agreed strategy before any submission.

  • VAT Assessment
  • Notice of Adjustment
  • LPF Article L.57
  • Tax Surcharges
  • Conseil d'État
FAQ

VAT Litigation and Assessment: Your Questions

What is the deadline to respond to a VAT notice of adjustment?

You have 30 days from receipt of the notice of adjustment to lodge your observations or confirm acceptance (LPF articles L.57 and R.*57-1). Within the adversarial procedure, this period is extended by a further 30 days if you request it before expiry, making 60 days total. Extension is essential in high-value cases: it allows you to gather evidence, quantify each ground precisely and build a response that frames the entire subsequent procedure.

What are the most common VAT assessment grounds?

Five issues recur constantly: challenge to the right of deduction (irregular invoices, pro-rata disputes in mixed-income businesses and holding companies), reconstruction of collected VAT (omitted turnover, incorrect rate or chargeable date), omitted self-assessment on intra-Community acquisitions, imports and sub-contracted construction, place of supply disputes over services and goods, and incorrectly invoiced VAT, due by the sole fact of invoice mention under CGI article 283(3). Each ground requires distinct defences, often grounded in EU law.

What surcharges are added to VAT assessments?

All assessments carry interest on late payment at 0.20% per month, or 2.40% per annum (CGI article 1727). Depending on circumstances, article 1728 surcharges apply for late or failed filing: 10%, rising to 40% if not filed within 30 days of formal notice, and 80% for concealed activity, or article 1729 surcharges for under-reporting: 40% for deliberate breach and 80% for fraudulent evasion or abuse of law. On a one-million-euro assessment, the difference between no surcharge and a 40% surcharge equals 400,000 euros: surcharge disputes are a separate litigation.

How far back can the tax authority reassess VAT?

For VAT, the authority may assess up to the end of the third year following the year in which VAT became chargeable (LPF article L.176). In practice, an audit started in 2026 may cover VAT from 2023. This extends to the end of the tenth year where you carry on a concealed activity, meaning you failed to file returns on time and did not declare your activity. The concealed activity label carries severe consequences and may be challenged: case law recognises proof of honest error as a defence against the omission.

Can I suspend payment of assessments during litigation?

Yes. A formal objection may include a request for a stay of collection proceedings under LPF article L.277: recovery of the disputed amounts is suspended until final judgment. Above certain thresholds, the tax collector may require security (bank guarantee, pledge, mortgage). The choice of security and any challenge to a refusal form part of the litigation strategy, as they affect cash flow during what may be a multi-year procedure.

How far can I appeal a VAT assessment?

Disputes follow an ordered path: observations on the notice of adjustment, hierarchical review, then after recovery notice, formal objection and application to the administrative tribunal if rejected expressly or by silence. The judgment may be appealed to the administrative court of appeal, then to the Conseil d'État by way of cassation. Because VAT is harmonised across the EU, the court may refer a preliminary question to the CJEU (Court of Justice of the European Union). The firm conducts these proceedings end-to-end, assessing at each stage whether to continue, settle or regularise.

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