VAT France : FR Tax Authorities can invalidate your VAT number

Maintaining (or not) a FR VAT identification number : a right of control of the FR Tax Administration strengthened by the Finance Act for 2023

In France, article 286 ter of the General Tax Code (CGI) introduces the various activities for which a VAT taxable person is required to register for FR VAT. To this extent, FR tax authorities exercise a right of control over the attribution or maintenance of the number, even if it means invalidating the VAT identification number.

Non-attribution or invalidation of the FR VAT identification number

Until December 31, 2022, article L10 BA of the Tax Procedures Book (LPF) specified four cases in which the tax authorities could refuse to assign or invalidate a FR VAT identification number:

1. When no answer has been received within 30 days from a request for additional information from the administration in the purpose of ruling on the attribution or maintenance of a VAT number;
2. When the conditions of attribution are not met;
3. When false information was provided in order to obtain this number;
4. When data changes have not been communicated.

Since January 1, 2023, this list has been supplemented by a fifth case of non-assignment or invalidation of a VAT identification number:

5. The obligation to be represented by a taxable person established in France and accredited to the tax authorities has ceased to be respected.
This circumstance implies that the failure to appoint an accredited tax representative – by a trader not established in the European Union who is liable for VAT in France – is now subject to a sanction designed to reinforce this appointment obligation.

Naturally, once the FR VAT number is invalidated, it will no longer be valid in VIES and the counterparties of the company in question may be obliged to purely cease their operations.

Extension of the cases of invalidation of the VAT identification number

Whether it is based on an objective situation or established on the basis of a set of clues, the invalidation of the VAT identification number appears to be an extension of the administration’s control perimeter and thus constitutes an additional means of fighting VAT fraud.

Indeed, article L10 BA of the LPF presents two new cases of invalidation that can be implemented:

1) Invalidation “under conditions”

When there is corroborating evidence that a number is used by an identified trader who knew or could not have ignore being involved in a fraud aiming at avoiding the payment of tax due in France or in the EU. In this case, the VAT identification number can be invalidated:

• If no answer is given, within 30 days, to the request for regularization of a failure to declare VAT or failure to file the recapitulative statement of customers relating to intra-Community supplies;
• At the end of a period of 15 days from the notification of the shortcomings observed, when it is established that the identified trader has repeatedly provided inaccurate information in the summary statement of customers in the VAT returns or in any commercial document and that this has resulted in a reduction of the VAT due.

2) Immediate invalidation without delay

When there is corroborating evidence that the VAT number is used by an identified trader who knew or could not ignore that he was involved in a fraud aiming at not paying the tax due in France or in the EU, and that the trader obstructed the course of the tax control operations, or the exercise of the right of investigation

As the invalidation decision is an administrative decision, it must be motivated and notified to the identified operator, who can make comments.

To this extent, and if the taxpayer’s situation justifies it, the VAT identification number can be re-set by the tax authorities.

The French tax authorities have thus acquired a reactive tool to try to thwart VAT fraud schemes. However, good faith operators may suffer from these new provisions. If your VAT number has been invalidated or if it has not been attributed to you, FISCALEAD can help you so that the administration can restore it, attribute it to you or maintain it!