Input VAT denied where supplier and delivery evidence indicated fictitious transactions

Summary

• The Versailles Administrative Court of Appeal decision No. 25VE01433 reportedly upheld denial of input VAT on invoices from five suppliers where the available evidence indicated that the underlying purchases were fictitious. [pwcavocats.com]
• Warning indicators included newly incorporated suppliers, missing tax filings, rapid liquidation, no employees, minimal premises, no storage capacity and purchasing activity unrelated to the elevator sector. The customer also lacked transport documents, delivery evidence, commercial correspondence and project-level allocation records.
• Supplier VAT-number validation is only one control. Businesses should combine tax-registration checks with beneficial-owner, address, staff, capacity, bank-account, transport and delivery verification. Enhanced checks are particularly important where a small supplier rapidly represents a substantial share of total purchases.

Article

In a decision dated 19 June 2026, the Versailles Administrative Court of Appeal reportedly upheld the refusal of input VAT deducted by a company engaged in installing and maintaining elevators.

The tax authority considered that invoices issued by five suppliers did not correspond to genuine transactions. It relied on a broad set of indicators rather than a single defect.

The suppliers had been incorporated shortly before beginning business with the taxpayer. They failed to comply with tax-filing obligations, and four reportedly entered liquidation approximately one year after incorporation. Their registered premises consisted of domiciliation addresses or very small offices. They declared no employees and had no storage facilities or other identifiable operating locations.

Their own procurement patterns also appeared inconsistent. Some purchased cosmetics or beverages from EU suppliers despite allegedly reselling goods for elevator installation and maintenance.

The taxpayer was unable to produce key supporting evidence, including consignment notes, delivery confirmations, supplier correspondence or records connecting the purchases with specific projects. This absence was especially significant because the disputed suppliers represented approximately 83% of purchases in 2015, 67% in 2016 and 16% in 2017.

The decision reinforces that a formally valid invoice may not be sufficient when objective evidence indicates that the documented supply did not occur. Businesses should be able to demonstrate both the identity of the supplier and the operational reality of the purchase.

Procurement controls should be risk-based. New suppliers should be checked against VAT and company registers, but the review should also assess trading premises, staffing, industry experience, source of goods, bank-account ownership and logistical capacity. Purchase orders, delivery records, warehouse receipts and installation or consumption records should form a continuous audit trail.

A sudden concentration of purchasing with newly created entities should trigger enhanced review before invoices are approved and VAT is deducted.

Source Links

• Read the July 2026 PwC VAT eMagazine case overview [pwcavocats.com]

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