Full VAT group simplification in France

France introduced the full VAT group simplification starting January 2023, allowing VAT groups to be treated as single taxable persons. Find also the 2024 updates.

French VAT Groups Changes 2024

The French tax authorities published a couple of updates applicable to the French VAT groups as of February 21, 2024: 

  • One of the key amendments introduced by the administrative doctrine concerns the submission deadline for the VAT group representatives to provide the list of group members to the tax authorities. Previously set on January 31st, this deadline has now been moved forward to January 10th, starting from the year 2024. This change aims to streamline the administrative process and ensure timelier compliance with reporting requirements.
  • Moreover, another significant modification refers to the 3-year time limit to join or leave a French VAT group. Previously, any additional entitiy could join the VAT group for the mandatory period of three years. Now, taxable persons who did not meet the conditions when exercising the option have the opportunity to join the VAT group during the mandatory three-year period. Likewise, an entity subject to VAT that was not yet created or constituted on the date of the creation of the VAT group, or an entity that was not yet subject to VAT on that date, may integrate the group within the first three-year period, provided they meet all the other conditions (having economic, financial and organizational links with its members). This adjustment opens the door for greater flexibility.

Find here and here the official information.

Introduction of the Full VAT Grouping in France in 2023

France introduced the full VAT group simplification starting January 2023. This implies extending the scope of the current VAT groups scheme from a mere administrative simplification to a full VAT group regime, allowing them to act as a single taxable person.

The application must be sent by the 31st of October for becoming effective from January of the following year. Companies had until 31 October 2022 to apply for becoming a VAT group in 2023.

You may find here the official notice from the French tax authorities about the new VAT group regime.

Companies had until 31 October to apply for becoming a VAT group in 2023. Check here the official notice from the French tax authorities about the new VAT group regime.

Old VAT group simplification in France

Before the 2023 update, it was only possible for French companies to opt for an administrative simplification for VAT groups. VAT groups were not treated as single taxable persons, and intra-group supplies were not disregarded for VAT purposes. Until the implementation of the new full VAT group simplification, each individual entity had its own VAT obligations, and they needed to file their own VAT return and issue invoices from their VAT number. The simplification consisted of consolidating all VAT due into a single payment, allowing for cash flow advantage for groups of companies. In addition to each member's VAT return, the head of the group will file a monthly VAT return consolidating the VAT position of all members and calculating the resulting total VAT position of the group.

Regarding liabilities, although the payment was made by the head of the group, each entity remained jointly liable for the VAT payment.

New VAT group simplification in France

The following specifics will apply to French VAT groups from January 2023:

  • Only French-established businesses can be part of a VAT group.
  • VAT grouping is optional in France. Companies can apply for a VAT group when meeting the requirements or they can choose to remain separate entities for VAT purposes.
  • There is a specific time frame to apply for the VAT groups regime: the option can be applied until the 31st of October for being effective from January of the following year.
  • Once the application is approved, a group VAT number is granted to the group. 
  • Intra-group transactions are disregarded for VAT purposes. Still, they must keep records of these transactions.   
  • Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
  • The minimum time period for a VAT group is three years. After the first three years, entities may come in and out of the French VAT group with the consent of the representative.
  • For VAT refund purposes, each member would be considered a separate business unit.
  • Members of a VAT group submit one single consolidated VAT return. It is not possible to file separate VAT returns for each entity.
  • Finally, invoices issued by the group members must refer to this fact including specific wording, as well as the name, address, and individual and group VAT numbers. The wording can state: « Membre d’un assujetti unique »

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