French VAT fraud guidance

The French tax office has issued guidance for companies to help them identify potential VAT fraud involving their suppliers. The guidance comes as the French revenue looks to place more responsibility on purchasers to detect fraud being perpetrated by their suppliers. Potentially, companies can lose the right to deduct input VAT from fraudulent suppliers if they should have reasonably detected any fraud.

The French tax authorities have published a number of indicators for companies to use as a checklist to help identify fraudulent suppliers and transactions. These include:

• Suppliers not providing a valid EU VAT number which can be verified through VIES
• Suppliers providing goods or services in sectors subject to regular VAT and carosel fraud, including laptops, computer chips, mobile phones, precious metals, pharmaceuticals, carbon credit trading etc.
• Offers of goods at extremely low prices, or requiring high deposits
• A lack of a formal sales contract or support documentation
• Agents contacting customers promoting unknown suppliers
• Inconsistencies between the delivery from address and the invoicing address
• Requests for settlement of invoice to foreign bank accounts