Since 1 January 2017, the tax authorities have had a specific procedure to audit on the spot VAT credit refund claims, codified at article L.198 A of the Tax Procedure Code. This procedure, which comes in addition to ordinary audits, strictly frames the time limits and the terms of intervention. The tax authorities have 60 days from the first on-site intervention to issue their decision, and a maximum period of 4 months from the notification of the on-site inspection notice: beyond that, silence amounts to implicit acceptance and the refund is granted as of right. This time limit specific to the L.198 A procedure differs from the ordinary 6-month time limit applicable to standard contentious claims (Tax Procedure Code R*198-10). This page sets out the procedure and the good practices for asserting your rights.
The refund of a VAT credit is one of the most important financial breathers for companies with an investment activity (real estate, equipment) or a high export ratio. The on-site inspection procedure of article L.198 A of the Tax Procedure Code, introduced by the Finance Act for 2017, frames the audits that the tax authorities may carry out on such claims.
The issue is operational: the procedure is not intended to block refunds indefinitely. The time limits imposed on the tax authorities (60 days from the first intervention, 4 months maximum from the notification of the on-site inspection notice) protect the taxpayer against abusive blocking. If the tax authorities fail to observe those time limits without issuing a reasoned decision, silence amounts to acceptance and the refund is granted as of right. Note: this 4-month period specific to the L.198 A procedure must not be confused with the ordinary 6-month time limit (Tax Procedure Code R*198-10) applicable to standard contentious claims outside an on-site inspection.
The firm assists companies faced with an audit of their refund claims: preparation of the documentation, monitoring of the time limits, dialogue with the auditing service, defence in the event of an express refusal, and litigation where appropriate.
The claim is filed together with the CA3 return (form 3519 for the general regime) or through the dedicated procedure. The claim is treated as a contentious claim and processed as such. The filing date starts the time limits that may be relied on against the tax authorities.
The tax authorities may decide to carry out an on-site inspection at the company's premises. The first intervention is preceded by an inspection notice setting out the terms and the date. From this first intervention, the 60-day period begins to run for the decision.
The tax authorities have 60 days from the first on-site intervention to issue their decision (acceptance, partial refusal or total refusal). This time limit constrains the duration of the audit: beyond it, the tax authorities may no longer extend their request for documents or their analysis. Observing this time limit is essential for the taxpayer's defence.
The tax authorities have in total 4 months from the notification of the on-site inspection notice to issue their decision. Beyond this period, silence amounts to implicit acceptance and the claim is granted, a strong protection for the taxpayer. This time limit is specific to the on-site inspection procedure of L.198 A. It is not to be confused with the ordinary 6-month time limit applicable to standard contentious claims (Tax Procedure Code R*198-10), which governs the situation where the tax authorities do not trigger the on-site inspection procedure.
The VAT credit refund claim is itself a contentious claim: there is therefore no question of bringing a "supplementary contentious claim" in the event of a refusal. In the event of an express refusal, the taxpayer may refer the matter to the administrative court (then the administrative court of appeal and the Conseil d'État), after a possible hierarchical appeal to the superior service. The starting point of the time limit for referral to the administrative court depends on the indications of remedies and time limits appearing on the decision and on whether or not an express decision exists, hence the importance of a careful procedural analysis before any appeal.
The firm assists companies under an L.198 A audit: upstream preparation of the supporting documentation, monitoring of the time limits and of the conduct of the on-site interventions, reasoned dialogue with the auditor, hierarchical appeal in the event of a refusal, and litigation before the administrative courts.
For high-stakes audits (significant amounts, complex operations), we prepare in advance a standard response file that anticipates the auditor's requests and demonstrates the economic and legal consistency of the operations underlying the VAT credit.
The on-site inspection procedure for VAT credit refund claims, codified at article L.198 A of the Tax Procedure Code and applicable since 1 January 2017. This procedure allows the tax authorities to audit on the spot the documents supporting the VAT credit, while strictly framing the time limits and the terms. It differs from ordinary audits by its speed and its formalised framework.
Two time limits to know: (1) 60 days from the first on-site intervention to issue the decision; (2) 4 months maximum from the notification of the on-site inspection notice (L.198 A procedure). Beyond this 4-month period, silence amounts to implicit acceptance and the refund is granted as of right. This L.198 A time limit is not to be confused with the ordinary 6-month time limit (Tax Procedure Code R*198-10) applicable to standard contentious claims where the tax authorities do not trigger the on-site inspection procedure.
Important: the VAT credit refund claim is already a contentious claim: there is therefore no question of bringing a "supplementary contentious claim" in the event of a refusal. Two avenues of appeal: (1) hierarchical appeal to the superior service (departmental or regional interlocutor); (2) contentious appeal before the administrative court (then the administrative court of appeal and the Conseil d'État). The starting point of the time limit for referral to the administrative court depends on the indications of remedies and time limits shown on the decision and on whether or not an express decision exists: the procedural analysis must be carried out case by case before any appeal.
Documents typically requested by the tax authorities: detailed input invoices (with a check of the mandatory mentions of art. 242 nonies A of annex II), documents supporting the right to deduct (allocation to the taxable activity), earlier CA3 returns and the history of the credit, key contracts (acquisition, works, leases) underlying the deducted amounts, and evidence of taxable-person status and of the allocation. Upstream preparation considerably speeds up the inspection.
Yes, indirectly. If the on-site inspection reveals significant irregularities (non-compliant invoices, abusive deductions, inconsistent situation), the tax authorities may broaden the audit beyond the refund alone and initiate an ordinary accounting audit. Rigour in preparing the refund file is therefore essential so as not to open that door.
If the refund occurs after the time limits (or is obtained on a contentious appeal), the taxpayer may claim default interest (Tax Procedure Code art. L.208) at the late-payment interest rate (Tax Code art. 1727 — 0.20% per month, i.e. 2.40% per year), from the date on which the refund should have taken place. This interest partly compensates the financial loss caused by a prolonged blocking.
VAT framework and audits specific to real-estate operations.
Voir la page VATReporting framework and refund claim.
Voir la page VATRegularisation and defence where VAT is wrongly mentioned.
Voir la page LitigationGeneral audit and defence procedure.
Voir la pageA confidential first exchange to analyse the procedure, monitor the time limits, and defend your interests before the auditor or in litigation.
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