It happens that a foreign company with no (or no more) premises in France is subject to a tax audit (generally an “vérification de comptabilité”).
In the majority of cases, the foreign company will receive a tax audit notice (“avis de verification de comptabilité”) at its head office located outside France.
The situations are relatively diverse but may concern the cases of foreign companies carrying out distance selling (intra-community VAT) or cases of restructuring (for example, French company having been the subject of a universal transfer of assets – TUP – by its sole partner, a Portuguese company).
What then are its main obligations to enable tax audit operations?
In the event where the foreign company does not have any premises in France, its main obligations will be as follows:
• propose to the French tax administration a location (in principle) located in France;
• designate a person authorized to represent it during the tax audit.
1. Place of tax audit of the foreign company
The provisions of article L 13 of the LPF have the consequence that any accounting audit must, in principle, take place on the premises of the audited company, in the presence of persons authorized to represent it, except in the case where the administration, at the request of the taxpayer, carries out this verification in a place outside the company.
However, in the event that the company no longer has premises in France, it is up to its representatives to propose a location, in principle located in France, where, by mutual agreement with the administration, the tax audit may take place (Conseil d’Etat, March 16, 2016 no. 379626, 9th and 10th ch, Sté Europinvestment).
In practice, the place of control can therefore take place in France in the premises of the former accountant or even in the premises of the administration.
Finally, it should be noted that the High court (Conseil d’Etat) specifies that the place must “in principle” be located in France. Is it therefore possible to propose a location outside France or near the Border? This point has not yet been judged.
2. Appointment of a representative
The foreign company must designate a person to represent it in France during the control operations.
The designated person will be required to present to the administration the accounting documents, inventories, copies of letters, receipts and expenditure documents capable of justifying the accuracy of the company’s results (article 54 of the general tax code).
In practice, the foreign company may appoint an accountant or a lawyer, for example, to represent it.
3. Risks in the event of a lack of answers
It is appropriate to respond to requests from the administration because failing to offer a location and appoint a representative in France, the foreign company risks being considered as being in opposition to tax control and thus having a 100% penalty applied.
The tax audit of foreign companies that do not have premises in France will generally take place under good conditions to the extent that the foreign company has been able to anticipate its obligations as quickly as possible.
The Arfé law firm regularly assists foreign companies that are subject to tax audits.