Article 283, 3 of the French Tax Code lays down a strict rule: "any person who mentions VAT on an invoice is liable for the tax by the mere fact of invoicing it". This rule, known as the "wrongly invoiced VAT" principle, exposes suppliers to a non-recoverable net cost where they have mentioned VAT that was not due. BOFIP doctrine long made regularisation conditional on good faith. However, the BOFIP update of 8 January 2025 (BOI-TVA-DED-40-10-10) removed that condition where the risk of loss of tax revenue is eliminated, subject to a corrective invoice being sent to the customer. In parallel, the Conseil d'État confirmed in 2024 that good faith is taken into account in situations where the risk has not been eliminated. These developments open a new line of defence for businesses facing reassessments.
Article 283, 3 of the French Tax Code rests on a simple logic: mentioning VAT on an invoice creates the tax debt, regardless of whether the operation is actually subject to VAT. The aim is to prevent a supplier from circulating false deductible-VAT invoices to customers where the corresponding tax would not have been paid to the Treasury.
Regularisation of wrongly invoiced VAT therefore requires, in principle, that the supplier demonstrate the absence of any risk to the Treasury. The BOFIP doctrine of 8 January 2025 (BOI-TVA-DED-40-10-10 and BOI-TVA-DECLA-30-20-20-30) brought a major clarification: regularisation is available without any condition of good faith once the supplier has eliminated the risk of loss of tax revenue, typically through the issue of a corrective invoice to the customer, which prevents the latter from exercising a right of deduction on the initial invoice.
Where the risk has not been eliminated (for example: impossibility of issuing a corrective invoice, customer that cannot be traced, risk that the customer has already deducted the VAT), regularisation remains available but is reserved for the supplier acting in good faith. The Conseil d'État confirmed this approach in 2024: good faith becomes a central criterion of the defence.
The issue of a corrective invoice addressed to the customer is the primary tool for eliminating the risk of loss of tax revenue. The invoice must cancel or reduce the VAT initially mentioned and must actually be sent to the customer. This regularisation may take place voluntarily or in the course of an audit.
Where the customer was unable to deduct the VAT initially invoiced (for example: a customer that is not a taxable person, or a customer that has corrected its deduction), the risk of loss of revenue is in fact eliminated. Proof of that elimination may consist of a statement from the customer, a copy of its corrective return, or any other supporting document. Once the risk is eliminated, regularisation is available as of right, without any condition of good faith.
Where the risk has not been (or cannot be) eliminated, regularisation is available only to the supplier acting in good faith. Good faith is established through: (a) a reasonable initial characterisation (an acceptable interpretation of a complex situation); (b) the absence of repetition or of fraudulent conduct; (c) cooperation with the tax authorities once the error has been discovered. The Conseil d'État (2024) confirmed the importance of this criterion.
Where an operation should have benefited from the exemption under article 257 bis (transfer of a going concern, no VAT-able supply) but the transferor nonetheless invoiced VAT, case law treats that VAT as non-recoverable by the acquirer. The transferor remains liable for the VAT mentioned (French Tax Code art. 283, 3) without the acquirer being able to deduct it, a penalising situation that calls for particular care in the initial characterisation.
Regularisation must take place within the time limit for a litigation claim (Book of Tax Procedures art. R*196-1), the general time limit of 2 years from the point at which the tax is put into recovery. The procedure (set out in BOFIP BOI-TVA-DECLA-30-20-20-30 of 8 January 2025) is: (1) issue of the corrective invoice; (2) corrective VAT return; (3) refund claim or offset against subsequent returns. The tax authorities may verify that the regularisation is in order.
The firm assists businesses facing wrongly invoiced VAT: audit of the situation, analysis of the risk to the Treasury, organisation of the regularisation (corrective invoices, corrective returns), building of the good-faith case where appropriate, and defence in the event of a challenge by the tax authorities.
For high-value operations (real-estate disposals, transfers of a going concern), we secure the characterisation upstream to prevent VAT from being wrongly invoiced: prevention remains more effective than after-the-fact regularisation.
Article 283, 3 of the French Tax Code lays down the following rule: "any person who mentions VAT on an invoice is liable for the tax by the mere fact of invoicing it". This rule seeks to prevent the circulation of false deductible-VAT invoices. As a result, a supplier who has mistakenly mentioned VAT on an invoice (where the operation was not subject to VAT) remains liable for that VAT, even though it is not legally due, unless it can rely on a regularisation.
Two alternative conditions open the way to regularisation since the BOFIP update of 8 January 2025 (BOI-TVA-DED-40-10-10): (1) the supplier has eliminated the risk of loss of tax revenue, for example by issuing a corrective invoice, in which case regularisation is available as of right, without any condition of good faith; (2) the risk is not eliminated but the supplier acts in good faith, in which case regularisation remains available. The procedure runs through a corrective return and a refund claim.
Eliminating the risk requires that the customer was unable (or will not be able) to deduct the VAT initially invoiced. The means available are: (a) a corrective invoice cancelling or reducing the VAT, sent to the customer; (b) proof that the customer is not a taxable person or not entitled to deduct the VAT; (c) proof that the customer has itself corrected its deduction. Once that elimination is demonstrated, regularisation is available as of right for the supplier.
No longer, since 8 January 2025, where the risk of loss of tax revenue is eliminated. But good faith remains a central criterion in situations where the risk has not been (or cannot be) eliminated, for example where a corrective invoice cannot be issued. The Conseil d'État (2024) confirmed the importance of this criterion and the role of the court in assessing it.
A penalising case. Where the operation should have benefited from the exemption under article 257 bis (transfer of a going concern between two taxable persons, an operation outside the scope of VAT) but the transferor nonetheless invoiced VAT, the acquirer cannot recover that VAT. The transferor remains liable under art. 283, 3. Regularisation then necessarily runs through the issue of a corrective invoice and a rebalancing of the price between the parties, often at the cost of renegotiating the contract.
The general time limit for a litigation claim under article R*196-1 of the Book of Tax Procedures applies: until 31 December of the 2nd year following that in which the VAT initially invoiced was put into recovery. Beyond that point, regularisation becomes inadmissible and the VAT remains definitively due. Particular care as to time limits is required.
The VAT framework and the risks of wrongly invoiced VAT on complex operations.
Voir la page VATThe interaction between the election, exemption and 257 bis (transfer of a going concern).
Voir la page VATThe corrective-return procedure for regularisation.
Voir la page LitigationResponse to a reassessment proposal and defence of good faith.
Voir la pageA confidential first exchange to analyse the situation, organise the regularisation and build the defence in light of the BOFIP update of 08/01/2025.
Written by
Me François Ouairy, avocat associé en charge du bureau de Paris, expert en fiscalité immobilière, fiducie et fiscalité financière.
© BENSAID Avocats — The information on this site does not constitute legal advice and cannot replace a personalised tax analysis.