When a tax adjustment proposal is treated as a rejection
In a decision issued on 14 November 2025, the French Supreme Administrative Court (Conseil d’État), ruling in the Société Penn Ar Bed case, clarified the procedural treatment of VAT credit refund disputes. The Court held that a tax adjustment proposal may, in certain circumstances, be regarded as a formal rejection of a VAT credit refund claim and may therefore trigger the appeal deadline.
As a general rule, the time limit for bringing a tax appeal only begins once a rejection decision has been notified to the taxpayer. However, in practice, identifying such a decision can be complex in VAT refund matters, where different documents may reflect the Tax Authorities’ position. This uncertainty lay at the heart of the dispute.
In the case considered, following a tax audit, the Tax Authorities sent the company a tax adjustment proposal stating that the VAT credit refund claimed could not be granted. No separate rejection letter was subsequently issued. The company considered that the proposal did not constitute a formal rejection and therefore believed that the appeal deadline had not yet begun to run.
The French Supreme Administrative Court disagreed. It confirmed that a tax adjustment proposal may constitute an express rejection of a VAT credit refund where it clearly sets out the Tax Authorities’ refusal and informs the taxpayer of available appeal rights and time limits. In this case, those conditions were satisfied. As a result, the appeal period began upon notification of the proposal on 28 September 2018 and the company’s later action was held to be out of time.
This judgment reflects a pragmatic approach to administrative acts, focusing on their substance and legal effect rather than their formal designation. It is also a reminder that, in VAT refund disputes, a tax adjustment proposal — even though generally perceived as part of the audit process — may in some situations produce immediate procedural consequences for taxpayers.
