VAT REGISTRATION IN FRANCE
When do you have to register for VAT?
It is mandatory for your company to apply for VAT registration with the French tax authorities before starting your activities. Financial penalties may apply if the application for registration is submitted late.
The VAT expert's eye
The following operations require a VAT number but do not require the filing of VAT returns (form CA3):
- Intra-EU acquisitions made in France ;
- Intra-EU transfer of goods. In this case, the foreign company remains the owner of the goods shipped from France to another EU Member State.
What documents do I need to provide when I register?
If your company wishes to register for VAT in France, it is essential to contact the French tax authorities. There is no need to contact the tax authorities in your country of establishment.
In particular, your company will need to submit the following documents:
- The VAT registration form(s) completed in the language of the country
- A copy of the articles of association
- An extract from the trade register
- A certificate of VAT liability
- Power of attorney (if using a fiscal agent)
- Proof of activity on the territory of the country concerned: a contract, an order form, etc.
The French tax authorities may require some of these documents to be translated into French.
How long does it take to get a VAT number?
If your file is complete, it generally takes one month to obtain the VAT number. The competent administrative service (DRESG) which deals with foreign companies being totally disorganized, the real average time to obtain your French VAT number is between 3 and 6 months.
Is a fiscal representative necessary?
Non-European companies cannot register for VAT themselves in France. They have to do it through a VAT representative. This is a local company that will represent you to the local VAT authorities. He is responsible for the respect of all your VAT obligations, including those of which he was not aware. For this reason, he may require a deposit (e.g. a bank guarantee) from you before accepting the representation assignment. However, companies established in 42 non-EU countries (e.g. the UK) are exempt from appointing a VAT representative.
European companies are not obliged to appoint a tax representative. However, to facilitate their relations with the local tax authorities, they may appoint a proxyholder (agent) to carry out the tax formalities on their behalf. In this case, it is not necessary to issue a bank guarantee. The company remains solely responsible for paying its VAT debts.
VAT OBLIGATIONS IN FRANCE
Is it necessary to keep VAT accounting ledgers?
Your company must keep ledgers sufficiently detailed to enable the application of VAT and its control by the French tax authorities.
When do you have to file a VAT return?
Your company is required to file periodic VAT returns on a monthly basis when your turnover exceeds :
- 818,000 € : for sales activities and accommodation services;
- 247,000 €: for service activities.
It is also possible to opt for a quarterly declaration under certain conditions. When your VAT is less than € 4,000 per year, you can submit the CA3 return quarterly.
The simplified regime allowing companies to file their VAT return on an annual basis is not applicable to foreign companies.
The VAT return must be filed electronically by the 19th day of the month following the end of the taxable period.
The VAT expert's eye
Member States set the duration of the taxable period at one, two or three months. However, they may set different periods provided they do not exceed one year. The VAT return must be submitted within a period to be determined by the Member States. This deadline may not be more than two months after the end of each taxable period (Art. 250 of the VAT Directive).
Do I have to submit an annual return?
Your company is not required to file an annual recapitulative VAT return.
The VAT expert's eye
Member States may require the taxable person to file a return containing all the data referred to in Articles 250 and 251 and concerning all transactions carried out during the previous year. This return shall include all the information necessary for any adjustments. They authorize, and may require, the return to be made by electronic means under conditions which they determine (Art. 261 of the VAT Directive).
What is the deadline for paying French VAT?
The company must pay the VAT due by the 19th day of the month following the taxable period. Remote payment ("télérèglement") is mandatory.
A VAT instalment scheme is also applicable for foreign companies that file their VAT returns on a quarterly basis.
The VAT expert's eye
Every taxable person who is liable for the tax must pay the net amount of VAT when filing the VAT return. Every taxable person who is liable for the tax must pay the net amount of VAT when submitting the VAT return. However, Member States may set a different deadline for the payment of this amount or collect instalments (Art. 206 of the VAT Directive).
When should the intra-EU statement be filed?
The company is obliged to file an electronic intra-Community listing at the latest on the 10th day of each month.
The eye of the VAT expert
A recapitulative statement is drawn up for each calendar quarter within a period and according to procedures to be determined by the Member States. However, Member States may provide for recapitulative statements to be submitted on a monthly basis. Member States may allow, and may require, recapitulative statements to be submitted electronically under the conditions they determine (Art. 263 of the VAT Directive).
INVOICING RULES IN FRANCE
Does the invoice have to include VAT? Reverse charge?
As a supplier of goods or services, your company is normally obliged to issue an invoice with VAT to its customer. This is the general rule. However, there are many derogatory situations which transfer this obligation to pay tax to the customer himself. These situations are known as "reverse charge" situations.
The special reverse charge rules have been introduced in France for foreign companies:
For supplies of goods:
The reverse charge is applicable to all domestic supplies of goods made by a business not established in France, provided that the customer is VAT registered in France.
For supplies of services:
The reverse charge is applicable to all domestic supplies of services made by a business not established in France, provided that the customer is VAT registered in France.
What are the mandatory mentions on an invoice?
The VAT Directive lays down the minimum information that you must include on your invoice. In some cases, countries may add additional compulsory information. Particular attention should be paid to the conversion rates when the currency used on the invoice is not that of the country in which the transaction takes place, and to the specific statements justifying the legal reason why VAT is not charged.
What VAT rate should be mentioned on an invoice?
France has 4 differents VAT rates :
- Standard rate : 20%
- Intermediary rate : 10%
- Reduce rate: 5,5%
- Super reduce rate: 2,1%
Should the invoice be sent to your customer in paper form or electronically?
It is possible to send invoices in paper format. Electronic invoicing will become mandatory from July 1, 2024 for large companies, from July 1, 2025 for medium-sized companies and from January 1, 2026 for all others. The deployment of e-reporting obligations (transmission of sales in real time) will follow the same schedule.
VAT REFUNDS IN FRANCE
How can I recover VAT in France?
There are several methods to obtain refunds of French VAT. The practical formalities for reclaiming foreign VAT will differ depending on whether or not your company is established in Europe and/or is identified for VAT in France:
- If your company has a VAT number in France, it will have to submit a refund application in the form and within the timeframe required by local regulations. In principle, the VAT credit is automatically transferred to the following month. However, an actual refund can be requested under certain conditions. The minimum threshold is €760 per quarter (or €150 annually).
- If your company is established in a European country and does not have a VAT number in France, it will have to apply for a VAT refund electronically from its country of residence, in the form and within the time limits required by Directive 2008/9.Claims may not encompass a period greater than one calendar year (€50 minimum) or shorter than three calendar months (€400 minimum). Claims may not straddle two calendar years. In practice, you may file a maximum of four claims, each for a minimum time period of three calendar months, plus a supplementary annual claim.
- If your company is established outside Europe and does not have a VAT number in France, it will have to appoint a tax representative to submit its refund application in the form and within the time limits required by the 13th Directive.
Is French VAT recoverable on all expenses?
VAT incurred on purchases, imports or intra-Community acquisitions of goods and services can be reclaimed by a foreign company provided that these expenses are for taxable activities and provided that the appropriate documentation is available.
No input VAT can be recovered on any of the following expenses:
- Accomodation expenses incurred for the benefit of the company's managers or employees.