Is it possible to claim a VAT deduction when developing an app?

In 2017, a computer scientist developed an app for individual users that was free at the time. The app was designed to "analyze the content of messages and videos on the internet in order to remove hateful comments."

In 2018, he founded a company that launched a paid version of the app for businesses in 2021.

Following a tax audit,administration that the company had improperly claimed VAT deductions between August 2018 and September 2021.

The company challenged the tax assessment all the way to the Administrative Court of Appeals.

The court will find that“while the petitioner claims it was incorporated in June 2018 for the sole purpose of developing a paid version of the app for businesses, which was launched in the first quarter of 2021, it is undisputed that it did not recognize any revenue from these services during the period from its formation through September 30, 2020, and that it continued to maintain and develop the free app.”

It therefore finds that the company has not demonstrated that the expenses it incurred were incurred for the purpose of launching the paid app.

The Court finds that the expenses incurred to maintain and develop the free app were not related to the provision of services for consideration. It therefore rules that they fall outside the scope of VAT.

Since the expenses necessary for the development of the free app and the paid app were not recorded in separate accounts, the Court finds thatadministration challenge the deduction of the entire amount of VAT.

It therefore confirms the company's tax reassessment.

CAA Marseille, June 4, 2026, No. 25MA00402

This legal watch produced by Mispelon Avocat, a law firm specializing in French tax audit and French tax litigation. You can follow this legal watch subscribing to the newsletter via this link.