Tax reassessment of an SME: what is the deadline for responding in the event of a dispute?

A tax reassessment or "proposition de rectification" is applied when the tax authorities consider that errors have been found in the company's tax base following a tax audit. What are the deadlines for appeals by SMEs?







Don't confuse tax adjustments with tax audits

It is important to differentiate between tax adjustments and tax audits.

Tax adjustments are intended to correct any shortcomings or inaccuracies in the information declared by companies.

A tax audit is a multi-stage procedure, starting with the auditor's examination of the company's accounts. After examining the documents provided by the company, the auditor is in a position to present his conclusions, which may result in no adjustment being made.

In the event of a request for review, this is referred to as a tax adjustment.

The consequences of tax reassessment

The financial consequences of a tax reassessment vary according to the errors or omissions committed.

Penalties linked to the accounting records file may apply, for example, in the event of non-compliance with accounting standards or inaccessible documents.

In the event of late filing, interest may be charged by the tax authorities.

Finally, penalties apply when the auditor considers that the company is acting in bad faith (fraudulent accounting maneuvers, opposition to the tax audit procedure).

What is the procedure for contesting a tax reassessment?

Following the audit, the tax authorities present a proposed rectification to the taxpayer concerned, which the company is entitled to contest by putting forward its "observations".

In this case, for SMEs, the authorities have 60 days to respond. If no reply is received, the company's observations are deemed to have been accepted.

This guarantee applies to companies with sales of up to:

  • 1,526,000 euros for activities involving the sale of goods or the provision of accommodation
  • 460,000 euros for other service activities

In a ruling handed down on June 20, 2023, the Conseil d'Etat clarified that the 60-day time limit does not apply to companies justifying sales in excess of the required threshold for one of the audited and corrected financial years.

In this case, a company was subject to an accounting audit covering the financial years 2013 to 2015, as a result of which it was assessed additional corporate income tax for the years audited. Following the administrative court's rejection of the company's request for discharge of these taxes, the company appealed against this ruling.

However, the Conseil d'Etat did not grant the request. It pointed out that the company had declared sales of 2,290,153 euros for 2013, 480,725 euros for 2014 and 2,548,920 euros for 2015, and was therefore ineligible for the guarantee provided byarticle L 57 A of the French tax code.
In fact, one of the sales figures declared for the fiscal years audited exceeded the threshold of 1,526,000 euros.