When an overly cautious approach to VAT leads to a tax assessment

Following a tax audit, a company was served with a reassessment proposal whichadministration determined that it had not paid sufficient VAT for the years under review.

During the tax audit, the company stated that, contrary to the provisions of the relevant section of the General Tax Code, it had not deducted the VAT in the month during which it was entitled to do so.

She had stated that "as a precaution, the accountant in charge of tax returns would only report deductible value-added tax once he was certain that it had indeed become due from the company's client, at the same time as the receipt of advance payments."

However,administration the law and determined that, for the years under audit, the company’s conservative approach had led it to claim an excessive VAT deduction.

The Administrative Court of Appeal, to which the case was referred, will then uphold the tax assessment since the company did not dispute the amount of VAT claimed byadministration .

CAA Lyon, Jan. 15, 2026, No. 24LY02045

This monitoring service is provided by Mispelon Avocat, a law firm specializing in tax audits and tax litigation. You can stay updated by subscribing to the newsletter via this link.