Penalty for deliberate breach

In this case, the Court confirmed the application of the 40% penalty provided for by article 1729a of the FTC in case of deliberate breach (formerly “bad faith”), based on (i) the professional real estate manager quality of the applicant company and (ii) the importance of the mistake made (which lasted several months, even after the accountant raised the alert) and represented more than a quarter of the input VAT of the financial year. Consequently, the penalty was applied whilst the applicant company claimed that it had not been subject to any tax reassessment since its creation and had regularized its situation before the audit, a few months after being informed by its accountant of the mistake made.

The Court reiterates, in this case, the Conseil d’Etat case law concerning income tax according to which the FTA must place itself at the time of filing or presentation of the document indicating the elements to be used in order to assess the tax to characterize the breach. It stresses that the mere fact that the taxpayer had corrected the inaccuracies in its declaration before any tax audit cannot prevent the application of the penalty.

Michel Guichard

Michel Guichard, as a Partner, was responsible for the Indirect Tax (VAT Customs) practice and then for the Tax Litigation practice dedicated to assisting clients in national and EU litigation. […]

Bertrand Jeannin

Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT and customs policies. He regularly assists his clients in the […]

Nicolas Kazandjian

Barrister registered with the Hauts-de-Seine Bar, he started my career in the indirect tax service line of Deloitte Société d’Avocats in 1999. My current position is Director. My area of […]

Vanessa Irigoyen

With more than 16 years of experience, Vanessa has extensive expertise in the implementation of international efficiency business models for customs, export control and indirect tax purposes. Her functions notably […]

Anne Gerometta

Anne Gerometta is Indirect Tax Partner of Deloitte Société d’Avocats. She advises international groups on their indirect tax issues. Anne notably assists operators from the Financial Sector – bank, insurance […]

Delphine Nicault

Delphine Nicault is an Attorney-at-Law at the French Bar. She joined Deloitte in 2002 and assists her clients on day-to-day VAT issues. She developed an expertise in the VAT and […]