The 5% fine for failure to reverse charge
The Council of State refers to the Constitutional Council a priority question of constitutionality (QPC) concerning the 5% fine for failure to reverse charge
The generalization of self-assessment mechanisms (construction and public works, intra-Community acquisitions, imports, etc.) is leading to more and more questions from operators concerning the penalties applicable in the event of omission.
Indeed, it is perfectly legitimate to question the existence of a penalty when the Treasury has not suffered any prejudice since the amount due to it is zero.
This question has been submitted to the State Council for its opinion.
However, in a decision dated June 14, 2022, the EC considered that the 5% fine for failure to reverse charge could, due to the absence of a ceiling on the amount of the fine, infringe in particular the principle of proportionality of penalties guaranteed by the Constitution.
The EC also considered that this question was sufficiently serious to be referred to the Constitutional Council for examination.
In fact, this decision further feeds the jurisprudence on the constitutionality of tax fines and penalties.
Without anticipating the meaning of the decision that will be rendered, it should be noted that the Constitutional Council no longer hesitates to censure fines that are not capped.
This situation is reminiscent of the QPC decision n°2021-908 concerning a fine of 50% of the amount of the transaction due in case of non-issuance of an invoice and applied by the tax authorities.
In its decision, the Constitutional Council, in holding that the contested provisions failed to respect the principle of proportionality of penalties, based itself, on the one hand, on the fact that the rate of the fine was fixed and not capped, and on the other hand, on the fact that the legislator had provided for the application of a reduced fine, the amount of which was not capped either and the rate of which remained fixed, even in the case where the supplier justified a regular accounting of the transaction allowing the administration to carry out controls.
The analysis of the Constitutional Council should therefore take this contextual element into account.
Indeed, whether in the construction sector for subcontracted services, in the case of supplies of goods or services made by a non-established supplier or, since January 1, in the case of imports, the reverse charge consists of collecting the tax and deducting it on the same VAT return, according to one's deduction rights.
When the operator is an integral recuperator, the operation is perfectly neutral for him.
In the absence of financial prejudice for the Treasury, the practice of the tax authorities is to strictly apply the 5% fine without any moderation.
The referral of these provisions to the Constitutional Council, as well as the precedent of the censure of the 50% fine for failure to invoice, thus creates an opportunity for discussion with the administration on the merits of this sanction in the context of ongoing audits or litigation.
Nevertheless, the best option remains for operators to master the principles of the reverse charge in order to ensure that nothing is omitted in their tax returns.
e-VATplus proposes to accompany you in this process.
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