By two judgments dated July 8, 2014, No. 11VE03849 and No. 13VE02399, the Versailles Administrative Court of Appeal ruled, in the absence of specific rules, on the statute of limitation and on the procedure applicable to the claim for refund of carry-back receivables.
In these cases, the appellant companies had duly opted to carry-back their tax losses relating to a fiscal year against the taxable profits of the previous years. Unable to offset all of their tax losses, the remaining carry-back receivables have been used, in accordance with French law, for the payment of their respective corporate income taxes due in respect of the fiscal years ending during the five years following the closing of the fiscal year for which the option was exercised.
At the end of this period, in accordance with Article 220 quinquies of the French Tax Code, the unused balance of the carry-back receivables became refundable and the appellant companies requested a refund in this respect.
They considered on the one hand that the option for loss carry-back, which was a contentious claim, should also be considered as a claim for refund at the end of the period and, on the second hand, that the claim for refund, which was a reminder of their right to obtain their receivables, could be filed within the four-year limitation period provided by the law of December 31, 1968 concerning the general statute of limitation for receivables held against the State.
The Versailles Administrative Court of Appeal however followed the reasoning of the French tax authorities opposing the statute of limitation to the companies on the grounds that a claim for refund of carry-back receivables is not intended to challenge tax itself but tends to the recognition of a tax receivable resulting from a legislative provision.
As such, this kind of claim should be considered as a contentious claim that must be submitted before December 31st of the second year following the completion of the event motivating the claim. According to the Court’s ruling, the expiration of the five-year period following the end of the fiscal year during which the carry-back option had been exercised constitutes such event.
It should finally be noted that such consequences, which are particularly damaging to the companies concerned since they will never be able to recover their receivables against the State considering the lateness of their tax claim, could also apply to claims for refund of R&D tax credit receivables, which, alike the carry-back receivables, are considered as tax receivables.
Taxpayers should therefore be vigilant and file their tax claims as soon as possible when entitled to request for refund.