In this case, a director of a theatre class was the subject of an accounting audit which resulted in an adjustment of VAT on the ground that the exemption from that tax was not applicable to him.
The administration justified its decision by invoking the fact that the taxpayer was not paid directly by his students.
The taxpayer decides to go to court on the basis of a certificate provided directly by the public finance controller certifying that he was not subject to VAT.
The Administrative Court of Paris and the Court of Appeal confirmed the interpretation of the tax authorities.
The director then appealed to the Court of Cassation.
On the basis of Article 80 of the Tax Procedure Book :
” No increase in previous taxes shall be carried out if the cause of the increase pursued by the administration is a dispute over the interpretation by the person liable in good faith of the tax text and if it is shown that the interpretation on which the first decision is based was, at the time, formally accepted by the administration.
The same applies when, in the context of an examination or audit of the accounts or an adversarial examination of the personal tax situation, and provided that it has been able to make a decision in full knowledge of the facts, the tax authorities have taken a position on the points of control, including tacitly by the absence of rectification.
Where the taxpayer has applied a tax text in accordance with the interpretation which the tax authorities had made known in their published instructions or circulars and which they had not reported on the date of the transactions in question, it may not pursue any increase by supporting a different interpretation. Instructions or circulars published relating to the collection of tax and tax penalties are also enforceable against the administration, under the same conditions. »
In its decision, the Conseil d’État therefore considers that, in view of the information provided, that the certificate issued by the auditor at the request of the applicant is indeed a formal position taken by the French tax authorities within the meaning of Article 80 of the Book of Tax Procedure ; The Council of State therefore referred the case back to the Court of Appeal.
