The French Administrative Court of Appeal of Paris issued Decision No. 24PA02073 on 30 January 2026, clarifying that EU nonresident companies without taxable transactions in France cannot access standard French VAT deduction procedures and must rely on the EU nonresident VAT refund system.
The case involved a German motorsport company seeking refunds of French VAT incurred on racing-related expenses in September 2020. The company argued it should be treated as a French VAT-liable business entitled to deduct VAT under France's ordinary system, as its expenses were connected to services supplied to Porsche.
The court rejected this position, ruling that the taxpayer could not use France's standard VAT deduction mechanism because it carried out no taxable transactions in France and its services to Porsche were taxable in Germany. The expenses subject to French VAT were not directly connected to activities taxable in France, limiting any refund entitlement to the EU VAT refund procedure for nonresident businesses.
The court also confirmed that deficiencies in the tax authority's reasoning when refusing the original refund application did not affect the legality of the refusal or create any entitlement to a VAT refund. The decision reinforces that the nature of expenses incurred is irrelevant to determining refund eligibility—what matters is whether the business has taxable supplies in France.
