The tax ruling

The tax ruling is a particularly interesting tool, but it is still not well-known among taxpayers.

What is a Tax Ruling?

A tax ruling is a formal position taken by the tax authorities on:

• The interpretation of a tax provision,
• Or, the interpretation of the taxpayer’s specific situation in light of tax legislation.

This procedure is provided for in Articles L 80 A and L 80 B of the Tax Procedures Code (hereinafter LPF). It is open to individuals as well as professionals and applies to all taxes, duties, and fees provided for by the General Tax Code (hereinafter CGI).

The Procedure for Requesting a Tax Ruling

We will focus on the general ruling in which the taxpayer requests the tax authorities to take a position on their situation in relation to a tax provision.

It is necessary to submit the ruling request before the deadline for the taxpayer to file their declaration or, in the absence of a filing obligation, before the recovery of the taxes.

The ruling request must be very detailed. In accordance with Article R*80 B-1 of the LPF, it must include the name or business name and address of the author. In addition, it must specify the precise legislative provisions that the taxpayer wishes to invoke.

To benefit from the guarantees offered by the ruling, the request must be precise, complete, and exactly correspond to the taxpayer’s situation. If the request is incomplete, the tax authorities may ask the author to provide additional information.

The request must then be sent by registered mail to the competent service depending on the tax concerned.

The tax authorities have a maximum of three months to respond to the taxpayer’s ruling request. Note that if the request is incomplete, this period will only start from the date of receipt by the tax authorities of the additional documents.

It is possible to request a second review of the ruling request in case of disagreement with the initial response.

Guarantees Offered by the Tax Ruling

The tax authorities take a formal position on the taxpayer’s situation through the ruling.

Under Article L 80 A of the LPF, the tax authorities cannot increase taxes if the taxpayer has acted in accordance with a formal position taken by them.

The ruling indicates the steps to follow in relation to a tax provision. This ruling will only be binding on the tax authorities if the formal position was taken before the expiration of the filing deadline.

Attention, the guarantee offered by the tax ruling will only apply if:

• The taxpayer follows exactly the position of the tax authorities,
• The taxpayer is acting in good faith, meaning they have allowed the tax authorities to make an informed decision,
• The taxpayer’s situation is the same as that communicated to the tax authorities and on which they have taken a position.

It should be noted that the tax authorities’ position will only apply to the taxpayer who made the ruling request regarding their own situation.

Finally, some rulings are anonymously published in the BOFIP-Taxes. These will then have general scope and will be binding on the tax authorities. To invoke them, the taxpayer must be in a situation strictly identical to that mentioned in the published ruling.

Using the ruling request can be an opportune solution for taxpayers in a unclear tax situation. It also allows validating the interpretation of a tax provision, securing your operations.

Although opportune, the ruling request is subject to strict formal requirements. Therefore, it is advisable to seek the assistance of a tax lawyer to help you in drafting the ruling request.

Tax lawyers at LEXPERTAX are experts in taxation. They have developed extensive experience in the field of ruling requests. They will be able to advise and assist you in this process.