A company importing goods into Europe from a third country (USA, China, UK) must pay VAT when clearing the goods through customs.
In order to avoid pre-financing of VAT, many European countries have introduced the reverse charge technique for import VAT.
France changed its rules on 1 January 2022. The scheme is mandatory and automatic and all foreign businesses are now required to register for VAT in France.
Pre-financing of VAT can be avoided
In order to avoid this pre-financing of VAT, many European countries have introduced in their legislation the possibility to postpone the payment of VAT in the VAT return. Through this reverse charge technique, the import VAT is declared together with its claim for refund. The pre-financing of the tax is thus eliminated.
The conditions for the application of this reverse charge system are unfortunately left to the discretion of each European country.
What is our advice?
Does your company import goods into France? It must register for VAT in that country in order to be able to reverse charge the import VAT on a local VAT return.
This VAT return will be pre-filled with the information provided by the French customs. The company must therefore ensure the accuracy of the data, for which it alone remains responsible, by implementing two means of control:
- Cross-checking the pre-filled data with the data made available on the French Customs website
- The implementation of corrective processes in the event that errors are detected