Collection Tax Credit (CIC) and NAF Code

Is a company's NAF code alone sufficient to demonstrate its activity for the Collection Tax Credit (CIC)?

In this case from February 2023, the administrative court states that the NAF code assigned to a company is not sufficient in itself to demonstrate the reality of the activity it carries out.

The judges indicate: While Valérie Khalfon maintains, with reference to the NAF code 1413 Z assigned to it by INSEE, that it manufactures ready-to-wear textile articles, it is clear from the investigation, and in particular from the company's own writings and the accounting documents submitted to the court, that for the year in dispute, these articles were manufactured entirely by a subcontractor based abroad, using the designs it sent to the subcontractor.. In addition, although Valérie Khalfon maintains that it manufactures prototypes, it gives no details of the conditions under which this activity is carried out whereas, in particular, the company did not record any fixed assets in its 2017 balance sheet under "technical installations, equipment and industrial tooling". " . Under these conditions, it could not be regarded as an industrial company in the "textile-clothing-leather" sector within the meaning of the aforementioned provisions.s. The fact that the garments were manufactured by the subcontractor using raw materials selected and purchased by the company itself, and that the company controlled the manufacturing cycle for its models and assumed the marketing risks, is irrelevant in this respect. Consequently, in terms of tax law, Valérie Khalfon cannot claim, for the year in question, the benefit of the tax credit for the expenses it incurred, as defined in h) of II of article 244 quater B of the French General Tax Code. 

Expert opinion: It should be noted here that the judges do not reject the company's NAF code, but are interested in the reality of the company's activity, and in particular its involvement in the manufacture of textile articles. When drawing up the supporting documentation, it is therefore important to emphasize the company's real contribution, in order to benefit from the collection tax credit.

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