LOCAL VAT MEASURES FOR FOREIGN COMPANIES IN FRANCE
France had simplification measures applicable for call-off stock arrangements up to 31/12/2019. If conditions were met, foreign companies were not required to register for VAT purpose locally.
Since 01/01/2020, the European simplification regime for call-off stock arrangements ("2020 Quick Fixes") entered into force and is to be applied by all Member States. This implies that all other possible national arrangements regarding call-off stock arrangements are mute and, if they provide for divergent rules, should be viewed as not in line with EU Law.
Simplification measures applicable for call-off-stock arrangements in France up to 31/12/2019 have been withdrawn and replaced by the new European simplification VAT regime in respect of call-off stock accordingly.
Triangulation can be applied when the middleman (B) is VAT registered for others supplies in the 3rd country (Member State of destination)?
No
Triangulation regime ABC cannot be applied when the middleman B is also VAT registered in France (Member State).
Triangulation can be applied when the chain transaction involves four or even more parties?
No
Triangulation scheme is not applicable in chain transaction involving four or even more parties.
Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport. The intra-Community movement of the goods should only be ascribed to one of the supplies, and only that supply should benefit from the VAT exemption provided for the intra-Community supplies. The other supplies in the chain should be taxed and may require the VAT identification of the supplier in the Member State of supply.
However, the divergent approach amongst Member States in the application of these exemptions for cross-border transactions has created difficulties and legal uncertainty for businesses.
Optional reverse charge for supply of goods?
Yes
Reverse charge mechanism is applicable on all domestic supplies of goods carried out by a non-established supplier [whether he is VAT registered or not in France] provided the recipient is VAT registered in France.
Optional reverse charge for supply of services
Yes
Reverse charge mechanism is applicable on all supplies of services carried out by a non-established supplier [whether he is VAT registered or not in France] provided the recipient is VAT registered in France.
Optional reverse charge (art. 194 of the VAT Directive)
Member States in which the VAT is due may provide that the person liable for the payment of VAT is the person to whom the goods or services are supplied where the transaction is carried out by a taxable person who is not established in the country in which the VAT is due.
VAT Warehousing implemented in France?
Yes
France has introduced VAT warehousing regime applicable under specific conditions.
VAT Directive
Member States may exempt the importation of goods and the supply of goods which are intended to be placed under warehousing arrangements other than customs warehousing.
Postponed accounting for import VAT
VAT DIrective
Member States may provide that VAT on importation does not need to be paid at the time of importation on condition that it is entered as such in the VAT return to be submitted.
- Deferred payment means that the payment of the import VAT to customs is deferred for a nationally determined period. This is covered by Article 211, §1 of the VAT Directive which provides that Member States shall lay down the detailed rules for payment of the import VAT;
- Postponed accounting means that import VAT is accounted for and paid with other VAT obligations in the periodic VAT return. This is covered by Article 211, second paragraph, of the VAT Directive.
VAT OBLIGATIONS IN FRANCE
How is the tax period determined in France?
Monthly/Quarterly
Under the normal regime, your company has to report its VAT position by filing periodical VAT returns on a monthly basis. Quarterly filing can also be opted for under conditions.
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 (no more possible since 01/10.2018). Simplified scheme enabling companies to file their VAT return on an annual basis is not applicable to foreign companies.
When should periodical VAT return be filed?
For foreign companies, monthly or quarterly VAT returns are due on the 19th day of the month following the end of the tax period.
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.
VAT Directive
The tax period shall be set by each Member State at one month, two months or three months. Member States may, however, set different tax periods provided those ones do not exceed one year. The VAT return shall be submitted by a deadline to be determined by Member States. That deadline may not be more than two months after the end of each tax period.
Is this requirement laid down in the country and what is the filing deadline?
Your company is not required to file any summarizing annual VAT return in France.
VAT Directive
Member State may require taxable persons to submit a return in respect to all transactions carried out in the preceding year. That return shall provide all the information necessary for any adjustments.
Are quarterly filings allowed by the country and what is the filing deadline?
The recapitulative Statement [D.E.B.] must be drawn up for each calendar month and submitted to French VAT authorities by the 10th of the month after the end of the reporting period [month]. Filing the Statement on a quarterly basis is not possible.
VAT Directive
The recapitulative statement shall be drawn up for each calendar month. However, Member States, in accordance with the conditions and limits which they may lay down, may allow taxable persons to submit the recapitulative statement on each calendar quarter where the total quarterly amount of intra-EU supplies of goods does not exceed either in respect of the quarter concerned or of any of the previous four quarters the sum of € 50.000 or its equivalent in national currency. The recapitulative statement shall be submitted within a period not exceeding one month.
What is the payment deadline?
VAT due should be paid by the filing deadline for the VAT return. For the payment of VAT, e-payment [“télérèglement] is mandatory for foreign companies since 01/12/2015.
Are interim payments required?
Interim payments are not required.
VAT Directive
Any taxable person liable for the payment of the VAT must pay the net amount of the VAT when submitting the VAT return. Member States may, however, set a different date for payment of that amount. Member States may require interim payment to be made.
Is any VAT credit automatically carried forward or refunded?
A VAT credit is in principle automatically carried forward to the next tax period, unless a tax refund has been applied for. Businesses may apply for a refund of their VAT credit if it exceeds €760.
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).
VAT on petrol
Up to now, only VAT on diesel fuel was partially recoverable [80%]. VAT on petrol was not recoverable. Since 01/01/2017, companies have been able to recover 10% of VAT on petrol. This percentage will gradually increase in the coming five years. The percentage is 40% for 2019 and 60% for 2020.
VAT Directive
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period. However, Member States may refuse to refund or carry forward if the amount of excess is insignificant.
VAT OVERVIEW IN FRANCE
What is the local name of the tax?
Taxe sur la Valeur Ajoutée [TVA]
What is the structure of the VAT number?
French VAT numbers have 13 characters [FR + 11 digits]. The last 2 digits constitute a control number.
VAT Directive
Member States must apply a standard VAT rate [not lower than 15%] which must be the same for the supply of goods and for the supply of services. Member States may apply either one or two reduced rates [not lower than 5%] only to supplies of goods or services as listed in the Annex III of the VAT Directive.
VAT rates
France applies a standard VAT rate of 20% and three reduced VAT rates: 2,1%, 5,5% and 10%.
€ 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.The French Authorities also remind that a D.E.B. (the so-called “Déclaration d’échange de biens”) should be filed for Intrastat purpose where the annual threshold of € 460.000 is reached.
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