A French company can show a VAT credit and still see its refund request refused, reduced or placed on hold. This situation is common during the first year of a French subsidiary: the foreign parent pays professional invoices, the new company has little output VAT, the company files its CA3 return and refund form, and the Service des impôts des entreprises (SIE), meaning the French business tax office, asks for more evidence or rejects the request. The result is a cash-flow problem, but a refusal is not automatically the end of the claim. The correct response depends on the reason given by the administration: wrong form or threshold, missing invoice evidence, a bank-detail problem, a tax debt set-off, an incorrect calculation, or a dispute about whether the company itself incurred the VAT.

This article concerns a company established or registered in France, including a French SAS or SARL owned by a foreign founder. It distinguishes that situation from a foreign company with no French establishment seeking a refund of French VAT under the non-resident procedure. It explains what to check, which documents to send, when a corrected declaration is useful, and how to make a formal tax claim if the SIE maintains its position. The legal position described is checked against the official sources available on 26 August 2026. A foreign director should preserve the filing record, the rejection message and every invoice before attempting a second submission.

I. Why can a French company’s VAT credit refund be refused?

A. Does the French company have a refundable VAT credit and has it used the correct procedure?

VAT means value added tax. In French legal documents it is called taxe sur la valeur ajoutée, or TVA. A company generally collects TVA on taxable sales and deducts eligible TVA charged on business purchases. When deductible TVA is higher than collected TVA for the relevant period, the difference is a VAT credit. The credit may be carried forward to offset future VAT, or, if the statutory conditions are met, the company may request a payment from the French Treasury.

The starting rule is Article 271 of the French General Tax Code. Its paragraph IV states: “La taxe déductible dont l’imputation n’a pu être opérée peut faire l’objet d’un remboursement”. In English, deductible VAT that could not be set off may be refunded, but the provision sends the reader to the regulatory conditions and limits. The right is therefore a structured tax right, not an automatic transfer of every amount shown in the accounts.

The company must also file the required VAT return. Article 287 of the French General Tax Code says that a VAT-identified taxpayer must deliver a declaration to the competent tax service within the period fixed by the administration. The official wording begins: “Tout redevable de la taxe sur la valeur ajoutée identifié … est tenu de remettre … une déclaration”. For a company under the standard VAT regime, the return is normally the form 3310-CA3, commonly called the CA3. The CA3 is the monthly or quarterly VAT return that reports taxable transactions, collected VAT, deductible VAT and the resulting balance.

The refund request is separate from the mere existence of the credit. Article 242-0 A of Annex II to the General Tax Code provides: “Le remboursement de la taxe sur la valeur ajoutée déductible dont l’imputation n’a pu être opérée doit faire l’objet d’une demande des assujettis.” The company therefore needs a declaration showing the credit and the appropriate refund request, usually form 3519 for a refund during the year under the normal VAT regime. The official impots.gouv.fr instructions on making a VAT-credit refund request explain the online route through the professional account and the use of forms 3519 or 3517 depending on the regime.

Thresholds are a frequent source of refusal. Under Article 242-0 C of Annex II, an annual request under the simplified regime must normally be at least €150. A taxpayer under the normal regime can request a refund when the relevant return shows a credit, but the request normally must be at least €760. The text states that normal-regime requests must be “porter sur un montant au moins égal à 760 €”. Special situations can alter the threshold, including certain cessation, group or investment cases, so the company should not assume that a smaller credit is permanently lost. It may be carried forward or submitted under a different permitted timetable.

The administration’s current VAT-regime guidance confirms the practical pairing: a form 3519 is sent in addition to the monthly or quarterly CA3 for the normal regime, while a form 3517 is used with the annual return under the simplified regime. The same page confirms that a credit can be refundable during the year of creation. A foreign founder should ask the accountant or tax adviser to identify the regime actually recorded for the French company rather than selecting a form based only on the company’s turnover or the foreign parent’s accounting policy.

Timing and the period covered by the invoices also matter. Article 242-0 S of Annex II permits a refund request to cover purchases invoiced during the relevant period, imports during that period and certain invoices from the same calendar year that were not used in an earlier refund request. The company should create a period schedule showing the supplier, invoice date, net amount, VAT amount, payment date, accounting entry and line on the CA3. A refund request that mixes several periods without explaining the allocation can invite an avoidable query.

Finally, the rulebook is undergoing a scheduled recodification. The current Legifrance page for Article 271 records that some provisions are due to be repealed from 1 September 2026 after their replacement in the new code of taxes on goods and services. A company filing after that date should check the version then in force. The principle described here remains the same for the present filing: identify the credit, use the correct return and refund mechanism, and retain evidence that the amount is deductible.

A French subsidiary and a foreign company are not interchangeable for this purpose. A French company registered with a Kbis, meaning the official extract of its registration in the French companies register, has its own tax identity, its own VAT number and its own SIE. The fact that its shareholder or president lives abroad does not turn the subsidiary’s ordinary French refund request into a foreign-company claim. By contrast, a foreign company with no French establishment may fall under the special non-resident refund procedures. The official impots.gouv.fr page for a company outside the European Union explains the separate rules and the role of a French tax representative where the foreign company is taxable in France.

This distinction should appear in the first paragraph sent to the SIE: “The claimant is [French company name], SIREN [number], VAT number [number], registered in France at [address], and not the foreign parent.” If the claim is actually made by the foreign parent for French costs, the message should say so and identify the applicable international route. Confusing the two entities is one of the fastest ways to receive a technically correct refusal under the wrong procedure.

B. Is the refusal based on documents, the substance of the expenses, a tax debt or a calculation error?

A request for additional evidence is not always a final refusal. The SIE may ask for invoices, import documents, a bank certificate, a schedule of purchases, contracts or proof of the business purpose. The official impots.gouv.fr explanation of what follows a refund request states that the competent SIE may request additional documents, including invoices and supporting evidence for deductible VAT. A foreign founder should record the date of the request and the deadline given by the SIE. A complete response before the deadline is usually more effective than an immediate complaint alleging that the administration has refused the claim.

The first documentary question is whether the invoice identifies the French company as the customer. Article 289 of the General Tax Code requires an invoice for the relevant business supplies and requires mandatory information about the parties, the goods or services and the VAT. The article also provides that a document modifying an original invoice and referring to it specifically and unambiguously is treated as an invoice if it includes the required information. The current text is available at Article 289 of the General Tax Code.

Invoice errors do not all have the same consequence. In Conseil d’État, 15 June 2023, no. 460576, the Council of State explained that the required invoice mentions are formal requirements and that their omission does not automatically cause the loss of the deduction if the underlying conditions are proved and a document allows the extent of the right to be determined. The decision’s formulation is: “sa méconnaissance n’a pas pour effet d’entraîner la déchéance de ce droit”. This is not a licence to send an incomplete file. It is a reason to obtain a corrected invoice, a credit note or other reliable document and to show the economic reality of the purchase.

The second question is whether the expense was incurred for the company’s taxable business. A foreign founder may have paid a lawyer, software provider, architect, bank or consultant before the French subsidiary opened its account. The invoice may be commercially connected to the future business but still name the founder or foreign parent. The company should assemble the engagement letter, proof of payment, incorporation documents, the board or shareholder decision approving the expense, and the document by which the company took over the commitment. A payment by the parent does not, by itself, prove that the French company was the legal recipient of the supply.

In Conseil d’État, 14 November 2025, no. 490867, the dispute concerned VAT on investment expenses incurred before a company was incorporated. The Council of State considered the identity of the person who bore the VAT and the effect of a later takeover of commitments under Article 1843 of the Civil Code. The practical message for a foreign founder is precise: separate pre-incorporation costs paid by the parent, costs paid personally by the founder and costs invoiced directly to the registered French company. Cite the decision with the incorporation file and do not simply re-label the invoice in the bookkeeping.

The third question is whether the expenditure creates a right to deduction. Article 271 links deduction to taxable operations and to the legal conditions of the purchase. Private expenditure, expenditure unrelated to the company’s economic activity, and VAT charged where it was not legally chargeable can all reduce or eliminate the credit. A new company with no sales can still have a real credit: the absence of output VAT is not, by itself, proof that the input VAT is invalid. The file should show the planned or actual taxable activity through contracts, orders, a business plan, premises, staff, licences, website evidence, customer correspondence or delivery documents.

The fourth question is whether the administration has tested the whole credit rather than only the invoices listed in the refund form. In Conseil d’État, 22 July 2025, no. 489158, the Council of State held that, when examining a VAT-credit refund request, the tax administration may “contrôler toutes les opérations qui ont concouru à la formation de ce crédit” and may reduce or cancel the credit if collected VAT is insufficient or deductible VAT is excessive. A foreign parent should therefore reconcile the entire relevant VAT ledger, not just the largest invoices. The administration may find an error in a sale, a reverse-charge transaction or a previous period that affects the credit requested.

The fifth question is whether the “refusal” is actually a set-off against a tax debt. If the French company owes VAT, corporate tax, payroll tax or another debt handled by the same tax service, the SIE may compensate the debt against the credit. The official impots.gouv.fr explanation gives the example of a €6,000 credit and an €800 tax debt, resulting in a €5,200 transfer. Ask for the calculation and the debt reference. A set-off should not be described as a rejection of the credit if the administration accepts the underlying amount but pays only the balance.

The sixth question is whether the company requested the refund while the credit should first have been carried forward. In Conseil d’État, 22 July 2026, no. 504330, the Council of State addressed a taxpayer that moved between credit and debit positions during the relevant period. It stated that the taxpayer should report the corrected credit on subsequent returns so that it can be used against later VAT, then request repayment of any excess under Articles 242-0 A and following of Annex II. A foreign founder should ask for a period-by-period reconciliation before treating a refund refusal as an unlawful denial.

There is a finality risk. In Conseil d’État, 4 December 2017, no. 395947, the Council of State considered a refund request that had been definitively rejected because the company had not challenged the decision. The decision is a warning against allowing a rejection to become final while the company continues to assume that the same credit can be claimed later. Download the decision, calculate the response or claim deadline, and obtain a written position from the SIE.

Late filing can create a separate liability. Article 1728 of the General Tax Code provides a 10% increase in the absence of a formal notice, or where the declaration is filed within thirty days of a formal notice, and a 40% increase when it is not filed within that period after a formal notice. The provision says: “Le défaut de production dans les délais prescrits d’une déclaration … entraîne l’application … d’une majoration”. The exact amount depends on the tax due and the procedural facts. A company should file a missing CA3 promptly, pay any undisputed amount and address the penalty separately rather than leaving the return unfiled because the refund calculation is disputed.

Interest on a late payment or a correction must also be separated from interest on a refund. Article 1727 of the General Tax Code fixes the ordinary late-payment interest rate at 0.20% per month and explains how the period is calculated. The article says: “Le taux de l’intérêt de retard est de 0,20 % par mois.” That rule concerns a fiscal debt. It does not mean that every delay in processing a VAT-credit refund automatically produces interest for the company.

In short, a foreign-owned French company should classify the SIE’s message into one of five categories: incomplete information, threshold or form error, substantive deduction problem, set-off against a debt, or a final refusal of the legal right. The response, the evidence and the deadline differ for each category. A generic email saying “the refund was refused” is not enough for a reliable legal assessment.

II. How can a foreign founder challenge the refusal and recover the credit?

A. What should the company send to the SIE before making a formal tax claim?

Start by creating a refusal file with a fixed index. Put the SIE message or decision first, followed by the CA3 for the period, the 3519 request, the accounting VAT ledger, the invoice schedule and the bank details. Add a one-page chronology: incorporation date, Kbis date, VAT registration date, invoice dates, filing date, request for further information, response date, refusal or partial-payment date, and every telephone call followed by written confirmation. A founder abroad should nominate one contact person in France and give the SIE a French telephone number or an authorised representative’s details where appropriate.

The cover letter should identify the claimant with precision. State the company’s legal name, registered office, SIREN, VAT number, legal form, president or gérant, tax period and amount requested. Explain that the company is the claimant even if a foreign parent funded the bank account or paid an invoice. If the request is for the foreign parent instead, stop and use the non-resident procedure. The official impots.gouv.fr VAT-registration guidance explains that the tax account, bank details and representative arrangements affect the processing of future VAT refunds.

Then answer the SIE’s reason point by point. A useful table has four columns: SIE objection, legal or factual answer, document number and requested correction. For example:

• “The request is below the threshold”: show the applicable regime, explain whether the credit is carried forward or falls within a statutory exception, and submit the request at the correct period;
• “The invoice is not sufficient”: obtain a corrected invoice or credit note, attach the contract and proof of payment, and explain the business use;
• “The company did not incur the expense”: show the pre-incorporation commitment, the takeover document and the accounting entry, while accepting that the legal identity of the original recipient may require a revised claim;
• “A debt remains due”: ask for the debt reference and calculation of the proposed set-off;
• “The VAT credit is not established”: provide a full reconciliation from invoices to the VAT ledger, CA3 lines and general-ledger balance.

The invoice schedule should be more detailed than a list of totals. For each invoice, state the supplier’s legal name and VAT number, invoice number, date, description, net amount, VAT rate, VAT amount, currency, payment account, payment date, accounting journal and the CA3 line used. Foreign-currency invoices should show the conversion method and the euro amount recorded in the accounts. Imports should be supported by customs or import documents. Intra-European Union services should be checked for reverse charge and the corresponding reporting line. The company should not ask the SIE to reconstruct these facts from a bank statement.

For a first refund request, prepare a separate business-purpose memo. Explain what the company sells, where it operates, why the purchase was needed, who approved it and how it connects to taxable transactions. Include evidence of the French premises, the commercial contract, the customer order, the employment or consultant relationship, the software subscription and the future revenue plan where relevant. A founder’s statement can support the file, but independent documents are stronger. The aim is to show that the purchase is not a personal start-up expense disguised as a company cost.

Check the bank information with equal care. The beneficiary name should match the claimant or the permitted account arrangement. Include the French RIB, meaning relevé d’identité bancaire, or the original bank certificate requested by the administration. If the account is outside France, verify that the account format is accepted for the company and for the refund mechanism. A foreign parent account, a founder’s personal account and the French subsidiary’s account should never be mixed without a written explanation. An incorrect bank file can delay payment even where the tax right is accepted.

Use the official electronic channel. The Entreprendre.Service-Public.fr page on the professional EFI account lists VAT declarations and the filing and tracking of VAT-credit refund requests among the online services. EFI means electronic filing through the company’s professional tax account. EDI, or electronic data interchange, is the route in which an approved accounting or software partner transmits the return. Keep the electronic receipt, the filing reference, the uploaded PDF list and the timestamp. A screenshot without the original receipt is weak evidence if a portal later shows no request.

The company may also need INPI evidence. INPI is the French National Institute of Industrial Property. The French one-stop shop for business formalities is the filing channel for corporate events, while the INPI’s electronic-procedure guidance identifies VAT declarations and VAT-refund requests among the company’s digital obligations. Use the INPI filing receipt, the Kbis and the VAT-registration notice to establish the sequence between incorporation and the first refund request. These documents do not prove the deduction by themselves, but they help explain why the company had a French tax identity and why the expenses were incurred during the launch phase.

If the SIE asks for a translation, send a clear English explanation together with the original French document and, where the administration requires it, a French translation. Do not replace a French invoice with an informal translation. Keep the original PDF metadata and the original file name. An English-speaking foreign director can sign the cover letter in English if the SIE accepts it, but the legal identifiers, amounts and period should be written in a form the French service can reconcile.

Ask for one of three outcomes: payment of the full refund, payment of the undisputed part with a written explanation of the balance, or a written decision maintaining the refusal with the legal and factual grounds. If the SIE only telephones, send a same-day message summarising the call and asking the office to correct any misunderstanding. This creates a dated record without turning a routine document request into litigation.

For a foreign company outside the European Union, do not use the French subsidiary checklist without modification. The impots.gouv.fr international VAT-refund guidance addresses non-resident claims, electronic filing, invoices and import documents, bank information, thresholds and the appointment of a representative fiscal where required. A foreign company without a French establishment may have to file through the portal of its State of establishment or through the dedicated non-resident route. The nationality of the shareholder is not the test; establishment, taxable transactions and the identity of the claimant are.

B. What formal claim, interest request or court route applies if the SIE maintains the refusal?

If the SIE maintains its position after the evidence response, the company should consider a réclamation contentieuse, meaning a formal tax claim seeking correction or repayment. The claim should identify the period, amount, return, refund form, legal basis and evidence. It should distinguish a request to correct the CA3 from a request to pay a refundable credit and from a challenge to a penalty. Sending a long narrative without stating the precise relief requested makes it harder to establish what the administration has accepted or rejected.

The general deadline must be calculated, not guessed. Article R*196-1 of the French Book of Tax Procedures, in the version in force since 30 July 2026, states that admissible claims concerning taxes other than local direct taxes must normally be filed “au plus tard le 31 décembre de la deuxième année suivant celle” of the relevant event, payment or notice. This rule is a framework; a particular VAT situation can have a specific event or route. The company should record the date of the express refusal, the date of an assessment or payment, and the last date that could apply before sending the claim through the secure professional mailbox or another accepted channel.

The claim should ask for an acknowledgement and a written decision. If the administration accepts only part of the credit, request the calculation of the accepted amount, any set-off and the reason for the balance. If the administration says the refund form was defective, the company can ask whether it should correct the CA3 and submit a new 3519 or preserve the original request through a formal claim. The choice depends on whether the error is procedural, whether the claim period remains open and whether the original filing created a recoverable right.

Interest must be analysed separately. Article L208 of the Book of Tax Procedures states that when the State is required to grant a tax relief or grants it after a claim correcting an assessment error, amounts already received are repaid with moratory interest at the rate referred to in Article 1727. Its wording begins: “Quand l’Etat est condamné à un dégrèvement d’impôt par un tribunal … les sommes déjà perçues sont remboursées”. This provision is not a general promise of interest for every administrative delay in a normal refund request.

The distinction appears in Conseil d’État, 15 January 2025, no. 473736. The Council of State held that a VAT refund obtained after a prior rejection of a claim can give rise to moratory interest and that, for a credit arising from excess deductible VAT over collected VAT, the interest period begins on the claim that reveals the refundable credit. The decision states that such refunds “doivent donner lieu au paiement d’intérêts moratoires”. If the SIE first rejected the request and the company later proves the credit through a formal claim, the claim date and the documents attached to it may affect the interest calculation.

Case law also limits the administration’s ability to treat the dispute as a free-standing accounting discussion. The decision in no. 489158 confirms that the administration may test all operations that formed the credit, but it also identifies the legal framework under which that test must occur. A formal claim should therefore contain a transaction-by-transaction reconciliation and a legal answer to every identified defect. If the SIE relies on a historical VAT assessment, identify whether it has become final, whether it was paid, and whether it can legally be set off against the refund.

Where the issue is a correction to a prior return, the decision in Conseil d’État, 27 July 2009, no. 297474 is useful. It explains that a taxpayer in a permanent-credit position should carry the excess credit on subsequent returns and, where appropriate, request repayment of the excess under Articles 242-0 A and following. The company should not file an isolated refund request that ignores the sequence of later CA3 returns. Build a period table showing the opening credit, new deductible VAT, collected VAT, credit used, credit carried forward and amount requested.

If the formal claim is rejected or remains unresolved in a way that produces a litigable decision, the dispute may go to the competent administrative court. This is tax litigation, not a claim before the commercial court simply because the company is a business. The court will examine the tax file, the legal grounds and the evidence. A foreign founder should obtain the full administrative record and calculate the appeal deadline from the notification of the decision. The correct application may seek repayment, cancellation of a tax adjustment, recognition of a credit, interest or a combination of those remedies, but each request needs its own factual basis.

Before filing, test the evidence against the likely objections. Can every invoice be matched to a supplier and payment? Is the French company the named customer? Does the purchase serve a taxable activity? Does the CA3 show the same amount as the ledger? Was the credit already carried forward or refunded? Was a foreign parent or founder the original recipient? Does the company owe another tax that can be compensated? Has the SIE issued a final decision or only asked for documents? An answer of “yes” or “no” to each question belongs in the claim file.

The company should also check whether the SIE’s refusal is actually a refusal of the entire amount. A partial refund, a set-off or a request to carry forward the credit may be financially different from a denial of the deduction. The official impots.gouv.fr guidance explains that once the requested refund is paid, that amount is no longer available for future deduction, and that a tax debt may be compensated. The accounting records and the next CA3 must therefore be updated consistently with the payment or decision.

A company that receives a penalty should address the penalty in the same correspondence but should not confuse it with the credit. If the CA3 was late because the foreign director could not activate the professional tax account, show the activation requests, the account-opening date, the accountant’s mandate and the first successful filing. If there was no tax due, that fact may affect the financial consequence of a late declaration, but it does not eliminate the filing obligation. If VAT was due, pay the undisputed principal and ask separately for relief from the penalty or interest, supported by the chronology and evidence of good faith.

Finally, set a future-control procedure. The French subsidiary should keep a VAT folder for each period, use a single company bank account for business payments, obtain invoices in the company’s legal name, reconcile the VAT ledger before the CA3 is filed, and archive the CA3 and 3519 receipts. The foreign parent should document intercompany funding separately from the subsidiary’s supplier payments. The president or gérant should know who receives SIE messages and who has authority to respond. These controls are not a substitute for a legal claim, but they reduce the risk that the next refund request will fail for an avoidable reason.

Conclusion

A refused VAT-credit refund for a French company owned by a foreign founder should be treated as a tax-file problem with a defined remedy. First identify the claimant: the French subsidiary or the foreign parent. Then verify the CA3, form 3519, period, threshold and bank details. Next prove the substance of the credit with invoices, payments, contracts and a business-purpose schedule. Ask the SIE to distinguish missing evidence, set-off, correction, partial acceptance and final refusal. If the position remains adverse, make a formal tax claim before the applicable deadline, preserve the receipt and analyse interest under Article L208 and the relevant Council of State decisions. The practical objective is not simply to repeat the refund request; it is to build a traceable legal and accounting record that allows the SIE or the administrative court to identify the exact amount lawfully refundable.

For broader guidance on establishing and operating a French company, see our French company formation and corporate-law page. A new article on one tax procedure should support that hub while answering the immediate question faced by the foreign founder: what documents must be sent, what deadline matters, and what can be challenged when the French VAT credit does not arrive?

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