List of third countries for which no fiscal representative is required
In principle, non-EU taxpayers which have to register for French VAT purposes must appoint a French fiscal representative (as long as they do not have any fixed establishment). However, this obligation does not apply if your company is established in some specific non-EU countries (which have concluded a mutual assistance agreement with France). The list has just been updated (decree of 28 February 2017) and now includes: Australia, Azerbaijan, Albania, Aruba, Curaçao, Faroe Islands, French Polynesia, Georgia, Ghana, Greenland, Iceland, India, Japan, Mauritius, Mexico, Moldova, New Zealand, Norway, Korea (Rep.), St. Barthélemy, St. Martin, St. Maarten, South Africa, Tunisia and Ukraine (underlined countries are new to the list). Argentina has been taken off.
E-payment ["télérèglement"] is mandatory for all non-resident companies having their bank accounts in foreign banking institutions that accept SEPA B2B direct debits. VAT payment will be debited automatically and directly by French VAT authorities when submitting the VAT return. All foreign companies must therefore register their banking details on the French authorities site and provide along a signed authorization from their bank. VAT returns relative to the month of November are already concerned. Although some leniency might be apply for a short transition period, failure to comply with this new obligation will imply an administrative fine of 0,2% of the VAT due [with a minimum of 60 EUR].
Deferred payment on import
Since 01/01/2017, it has become possible for all EU companies and non-EU companies to request the deferred payment through a formal authorization provided several conditions are met.
VAT return - Periodicity
Your company has to report its VAT position by filing periodical VAT returns on a monthly basis if your annual turnover exceeds € 777.000 [goods] or € 234.000 [services] or if you have opted for. However, you are allowed to submit VAT returns on a quarterly basis where your annual tax liability is under € 4.000. Under specific conditions, some companies may benefit from a seasonal filing regime allowing filing VAT returns only in respect of month during which transactions are performed. Simplified scheme enabling companies to file their VAT return on an annual basis is not applicable to foreign companies.
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]
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].
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].
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].
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).
New E-obligation for foreign companies VAT registered in France
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.