2024-01-17 06:25:21
The 2024 version of the General Tax Code (CGI) introduced a new measure relating to the joint and several liability of the DAF and RAF in matters of VAT. Faced with this new situation, administrative and financial directors (DAF) and administrative and financial managers (RAF) must become aware of the risks facing them and consider appropriate protective measures, such as taking out liability insurance. However, it is crucial to understand the limitations of this coverage for adequate protection.
In the current economic context, the new measure introduced by the 2024 version of the General Tax Code (CGI 2024) relating to the joint and several liability of administrative and financial managers (RAF) and administrative and financial directors (DAF) in matters of tax on added value (VAT), is of capital importance for economic players. The complexity of their joint and several liability in matters of VAT requires an in-depth analysis of the issues and solutions.
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As a reminder, according to Article 182 of the General Tax Code (CGI) 2024, several scenarios can result in the responsibility of these two key players in the financial and administrative management of companies, which underlines the importance of properly understanding the implications for these essential players who play a central role in strategic decision-making, supervision of financial operations and compliance with legal obligations. The RAF and DAF must become aware of the risks to which they are exposed and put in place appropriate protective measures. Additionally, businesses themselves must pay particular attention to tax compliance and rigorously managing their VAT obligations. It is in this context that Mehdi Tahri, expert in business law and corporate governance, highlights the complexity of joint and several liability in matters of VAT and offers solutions to better understand and protect yourself.
Cases of joint and several liability in matters of VAT
According to Article 182 of the General Tax Code (CGI) 2024, several scenarios can result in the liability of the RAF and DAF. One of the scenarios mentioned is that of the sale of business assets. Under this provision, the transferee is jointly and severally liable for VAT for the period from January 1 until the date of transfer, unless he has subscribed to a declaration of existence within 30 days following the start of the transfer. of its operations. This measure aims to ensure that VAT due is not evaded when a business is sold.
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The other scenario concerns violations of VAT declaration and/or payment obligations. In this case, those responsible for financial or administrative management, as well as the actual beneficiaries of the unpaid VAT, are jointly liable, which also includes penalties and surcharges. On this point, Mehdi Tahri draws our attention to the fact that the general tax code does not explicitly categorize the nature of liability, whether fault, error, negligence or fraud. Thus, joint and several liability can arise from non-compliance with legal obligations, encompassing various situations such as negligence, error or fraud.
Taking out liability insurance, a pragmatic solution
Faced with this complexity, the expert in business law and corporate governance suggests a pragmatic solution: taking out liability insurance. “This insurance provides coverage against the financial risks associated with these responsibilities,” he explains. “However, it is essential to understand the limits of this insurance. Indeed, it may not cover all liability scenarios, particularly those linked to fraud or gross negligence. It is therefore essential to carefully examine the conditions and exclusions of insurance policies to ensure adequate protection,” he emphasizes. In other words, purchasing liability insurance can be a pragmatic solution, but it is crucial to understand the limits of this coverage.
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Indeed, taking out liability insurance has many practical advantages for individuals and businesses who wish to protect themselves against the financial risks linked to their responsibilities. First of all, this insurance provides peace of mind in the event of a dispute or claim. In the event of damage caused to others or harm suffered by a third party, in this case the State, liability insurance can cover legal defense costs, compensation to be paid and any associated costs. However, it is important to point out that each liability insurance policy has its own conditions and exclusions. It is therefore essential to read the terms of the contract carefully to understand the limits of the coverage offered. For example, some insurance policies may exclude intentional damage, fraud, gross negligence or specific business activities. It is therefore essential to carefully examine the details of the policy and ask questions to the insurer to clarify these aspects.
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It should also be noted that liability insurance is not a substitute for personal or professional liability. It offers financial protection, but does not exempt you from respecting legal obligations and professional standards. It is therefore essential to continue to conduct business diligently and prudently, even with liability insurance in place. It is therefore by acting diligently and complying with legal and professional standards that administrative and financial managers (RAF) and administrative and financial directors (DAF) can complete their protection and minimize the risks of liability.
Take a holistic approach
As mentioned previously, taking out liability insurance is one of the solutions to consider to deal with this new situation of joint and several liability in matters of VAT. However, it is possible to explore other protective measures to ensure adequate coverage. Among these measures are the establishment of strict tax compliance procedures, the engagement of tax specialists to ensure rigorous management of VAT, ongoing training of RAF and DAF on tax obligations, and the regular carrying out of audits. internally to identify and correct any errors or omissions. By adopting a holistic approach, businesses can strengthen their tax compliance and minimize the risks associated with joint and several VAT liability.
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