VAT tax audit: explanations and procedure

VAT is the primary source of financing for the French state budget. In this regard, the tax administration pays close attention to the control of this tax. Each year, French companies face adjustments amounting to several billion euros in VAT. In 2021, the VAT tax audit yielded 3.7 billion euros for France.

There are several indicators that can trigger a VAT tax audit:

– inconsistencies between corporate income tax returns and VAT tax returns

– absence of VAT returns

– errors in VAT returns

– errors in the VAT regime to which the company is subject

– VAT fraud or attempted fraud

– tax audit of a client or supplier…

The VAT tax audit generally begins with the issuance of a verification notice by the Tax Administration. However, depending on the nature of the audit, the Administration is not systematically required to send a notice (e.g., default taxation).

Following the issuance of the verification notice, an initial meeting is scheduled with the inspector in charge of the audit. During this initial meeting, the company must, in particular, provide the inspector with the accounting entries file (FEC).

After collecting all the necessary documents and information for the completion of its VAT tax audit mission, the inspector will send the company a rectification proposal to communicate its findings.

The company that receives a VAT rectification proposal has the option to contest the tax authority’s position by responding to the rectification proposal. Organizing a response to the rectification proposal is done with the assistance of a tax lawyer who can advise and accompany you throughout the tax audit procedure.

To reduce the chances of undergoing a VAT tax audit, the company has the option to have its accounting and tax declarations audited by a tax lawyer. This audit, which can be conducted annually, will enable the tax lawyer to identify any errors and inconsistencies in the VAT declarations and address them before the company is subjected to a VAT tax audit.

VAT tax audit is a highly complex matter. The tax lawyers at LEXPERTAX are specialized in VAT tax advice and audit. We advise you on the best strategies for optimizing and auditing VAT tax to optimize and secure the taxation of your operations.