Import VAT Reverse Charge Automatically Applicable Since January 2022 in France

Reverse Charge on Import VAT in France

Starting 1 January 2022, according to the French tax authorities announcement, import VAT is automatically and mandatorily reported in the French VAT returns under the reverse charge mechanism by those taxpayers with a French VAT number. This mechanism is also known as postponed import VAT accounting.

This means that instead of advancing the payment of import VAT at Customs, taxpayers will be able to directly declare it in the VAT return following the Reverse Charge mechanism – ie., to declare it as payable and deductible in the same return, so the VAT impact is zero. This is a great cash flow advantage for those businesses making imports in France, who will not have to advance the VAT at Customs.

This change results from the transfer of competences on import VAT from the Customs authorities (the DGDDI, standing for Direction Générale des Douanes et Droits Indirects) to the Tax authorities (the DGFiP standing for Direction générale des Finances publiques). The import VAT reverse-charge will be mandatorily and automatically applied.

How VAT returns Are Impacted by This Mechanism?

French VAT returns were adapted to facilitate the application of the new measure. See below the main updates:

• The 14th day of the month, the VAT return will show the import VAT amounts pre-filled, based on the amount previously reported to the Customs authorities.
• The customs authorities (douane.gouv.fr) offer a service to check the detail of the pre-filled import VAT amount appearing on the VAT return.
• The deadline for submitting VAT returns is moved to the 24th of the following month for those taxpayers making imports in France.

The import VAT pre-filled must be reviewed by the taxpayer, and it can be modified if necessary. Also, the taxpayer is responsible to obtain the relevant import documents before validating the pre-filled amounts, and to complete these amounts if necessary.

Who Is Impacted by Import VAT Reverse Charge in France?

This simplification is mandatory for all businesses with a valid VAT number in France making imports in the country.

Despite the cash-flow advantage, these changes will require more administration from businesses to manage French import VAT. Foreign, non-VAT registered, companies importing goods in France and selling these goods under the domestic reverse charge mechanism must VAT register and self-assess the import VAT in the French VAT returns. In practice, these businesses do no longer recover VAT via the EU standard or 13th Directive mechanisms. Instead, they must register for VAT and self-account the import VAT in their French VAT returns. 

Special attention should be paid to the following scenarios:

• If you are subject to the simplified VAT regime (régime simplifié d’imposition or RSI), and you are making imports in France, you will need to inform your tax office to switch to the regular VAT regime (régime réel normal). Since this update is mandatory, the RSI can no longer be applied to your business.
•  If you are under a VAT franchise regime (régime de franchise en base de TVA) in France, the imports made must also be reported in the VAT return.
• If you are subject to a customs and VAT warehouse (régimes fiscaux suspensifs (RFS)) now the tax authority will be the main contact (DGFiP). In consequence, when clearing goods from a customs and VAT warehouse, the tax base – taxable or not, will be declared in the VAT return (information not pre-filled).

Imports in France Before January 2022

Prior to 2022, the reverse charge on import VAT (ATVAI) was only possible upon request to the French tax authorities. Companies that would like to benefit from this simplification needed to specifically request it to the Customs authorities, follow the procedure and, if conditions were met, then they were granted with an import license to reverse charge the VAT in the corresponding return. Some of these requirements included:

• The company must have performed at least 4 importation of goods in the EU in the past 12 months.
• Having a reliable booking system recording all the imports information.
• No serious or repeated offences to the tax and customs regulation for the past 12 months.
• If the company is non-EU, then will also need to appoint a customs broker with the AEO Status.

Since 1 January 2022 it is not necessary to make this specific request and meet the above requirements in order to apply import VAT reverse charge.