Nantes Administrative Court of Appeal – Decision of May 28, 2025
In a decision issued on 28 May 2025 (no. 24NT03194), the Nantes Administrative Court of Appeal ruled that a company cannot exercise its right to deduct VAT if it knew or should have known that its purchases were linked to a VAT fraud scheme.
In this case, JNL Automobiles, a vehicle trading company, sourced its vehicles exclusively from suppliers whose director also held functions within JNL and who were failing to meet their tax obligations. The Court considered that this situation should have alerted JNL and required it to take reasonable steps to ensure that its suppliers were properly accounting for VAT.
The ruling highlights the importance for businesses of checking the tax compliance of their commercial partners so they are not deemed to have contributed to a fraud. In practice, systematically requesting a tax compliance certificate (or similar proof of good standing) from suppliers could be an effective safeguard.
