June 2019
Sea Chefs, a company incorporated under German law, applied to the French Tax Authorities (FTA) for the refund of a VAT credit through the EU VAT Refund portal. The FTA dismissed Sea Chefs’ claim. This decision was based on the fact that Sea Chefs failed to provide a timely reply to a request for additional information sent to it by the FTA by email. According to the FTA, citing the French Tax Code (FTC) provisions implementing Article 20 of the EU VAT Directive, the taxpayer should have responded to the FTA’s request within one month.
Sea Chefs filed a challenge to the FTA’s decision before the Tax Court of Montreuil based on Article 23 of the EU VAT Directive. At the Tax Court, Sea Chefs provided evidence establishing that it had a right to a refund. The FTA argued in court that Sea Chefs’ claim must be dismissed since the request was time-barred because it did not comply with the one month time limit set out in the FTC. The FTA argued that it’s not appropriate for taxpayers to wait until a matter is before the French Tax Court to provide evidence to correct its VAT refund application.
The Tax Court stayed the proceedings and sought a preliminary ruling from the Court of Justice of the European Union (CJEU) on whether the French limitation rule is compatible with the EU VAT Directive’s principles of neutrality and proportionality.
On 2 May 2019, the CJEU handed down its decision. The CJEU concluded that the one month time limit for providing additional information to the tax authorities of an EU Member State for a refund is not a limitation rule that should result in a taxable person forfeiting the ability to correct its VAT refund application by adducing directly before the National Court evidence establishing its right to a VAT refund. However, to ensure that taxpayers do not routinely ignore the timeframe within which to provide information related to VAT refunds, the Advocate General noted that the Member State may order the taxpayer to pay the costs of the appeal proceeding when the time limit is not respected.
The taxpayer did not forfeit its right to a VAT refund because of its failure to comply with a request for further information within the one month time limit. Consequently, in France, a taxpayer may submit to the Tax Court additional information previously required by the Tax Authorities with respect to refund applications.
However, from a practice viewpoint, failing to comply in a timely manner to a request for information could still have a negative consequence, since French courts may follow the Advocate General’s suggestion of imposing costs.
David Hirsch
david.hirsch@avocats-bdo.fr
Rebecca Afana Elanga
rebecca.afanaelanga@avocats-bdo.fr