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More VAT News & Tips - France

News 

New E-obligation for foreign companies VAT registered in France - 01/01/2015

As from 01/01/2015, foreign companies VAT registered in France [without being established] must provide their VAT accounting in dematerialized format under a specific format [called “Accounting entry File” or “Fichier des écritures comptables”] in case of tax audit. The format and the content of the e-file must be in line with the French Code of Fiscal Procedures. Failure to comply with this requirement exposes the foreign company to huge penalties [min. € 5.000 or, in the event of a reassessment, to 10% of the taxes charged to the taxpayer].Foreign companies VAT registered in France should urgently review their accounting systems to ensure they are able to generate the VAT accounting in the format determined by the French authorities in case of tax audit.

Every taxable person must keep accounts in sufficient detail for VAT to be applied and its application checked by the tax authorities [Art. 242 of the VAT Directive]. 

VAT obligations – E-filing mandatory for foreign companies – 01/10/2014

Up to now, foreign companies VAT registered in France were not obliged to file their periodical VAT return by electronic ways by administrative tolerance. The tolerance is now abolished. Since 01/10/2014, e-filing [télédéclaration”] is mandatory for all companies for VAT return and VAT refund. For the payment of VAT, e-payment [“télérèglement] will be also mandatory for foreign companies as from 01/12/2015.

Member State shall allow, and may require the VAT return to be submitted by electronic means, in accordance with conditions which they lay down [art. 250 of the VAT Directive].

VAT on Import – Postponed accounting via the VAT return – 01/01/2015

Since 01/01/2015, a new postponed accounting via the VAT return has been available in France. Under specific authorization [“Procédure de domiciliation unique”], payment of French VAT on import could be postponed into the VAT return [no more pre-financing of VAT = positive impact on the cash flow].

Member States may provide that VAT on import does not needto be paid at the time of importation on condition that it is entered as such in the VAT return to be submitted [art. 211 of the VAT Directive].

VAT reporting obligations for foreign companies – New administrative guidelines

The French VAT authorities have published new administrative guidelines for foreign companies having VAT obligations in France: VAT registration, VAT return, proxy holder, VAT payment, VAT refund, etc. [B.O.I.  06/05/2015].

New rules for correcting VAT

French VAT authorities have published new regularization rules for VAT. When an omission of taxable income is under € 4.000 of VAT, the regularization is made in a special box of the VAT return of the month during which the omission was discovered [allowing automatic computation of late payment interest]. When the omission of taxable income is higher than € 4.000, the correction must be made through filing a rectified VAT return related to the period to which the correction refers, in the same conditions as the original return. [DGFP 03.06.2015 – News]

One should be very careful in regularizing past operations in France. Should you wish to obtain the new guidelines, This email address is being protected from spambots. You need JavaScript enabled to view it. .

Distance selling threshold reduced to € 35,000

From January 01, 2016, the distance selling threshold in France will be reduced from €100,000 to €35,000.  This reduction means that most of companies currently selling to private individuals in France via e-commerce will have probably the need to be registered for VAT in France now in order to start charging French VAT on these transactions.

Do you need assistance for VAT registration in France for e-commerce activities ?  This email address is being protected from spambots. You need JavaScript enabled to view it.


Tips

Construction sector – Reverse charge mechanism for sub-contractors

A reverse charge mechanism has been implemented in the French VAT Act [since 01/01/2014] in the construction sector and is applicable by sub-contractors provided the recipient [principal contractor for ex.] is a taxpayer VAT registered in France [established or not]. Administrative fine of 5% will be applicable if reverse charge has not been applied.

Member State may provide that the person liable for the payment of VAT is the taxable person to whom the supply of construction works, including repair, cleaning, maintenance, alteration or demolition services in relation to immovable property [art. 199 of the VAT Directive].


VAT on import – Importation followed by a local sale – Simplification measures

Foreign suppliers importing goods in France must pay French VAT on import. A simplification measure is however applicable in case the importation is followed by a domestic sale. In this specific situation, the customer VAT registered in France is authorized to pay import VAT instead of the foreign supplier under conditions.

VAT is due on the importation by the person designated or recognized as liable by the Member State of importation [art. 201 of the VAT Directive].


VAT on expenses – Limitation

The expenditure for which you are claiming VAT must be for the purposes of your business activity.

The main exceptions for which VAT cannot be claimed are:

  • Accommodation expenses incurred by your business for your staff and executives. However, expenses paid for third parties are accepted in certain circumstances;
  • Expenditure on passenger vehicles and related services;
  • Fuel, apart from diesel (80% of VAT can be claimed for the vehicles listed above) and liquefied petroleum gas (LPG) and natural gas (50% of VAT can be claimed for the vehicles listed above).

Admission to an “event” – 7 day’s rule

The place of supply of services in respect of admission to scientific, educational, entertainment or similar events is the place where those events actually take place in B2B relationship [derogatory rule]. According to French administrative guidelines, this derogation is only applicable provided the event does not exceed successive 7 open days [week-end excluded]. In case the 7 days threshold is reached, the transaction will be treated as an “activity” [and no more as an “event”] taxable in the country of the customer [general rule].


 

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