VAT registrations and simplications in France
When do I need a French VAT number?
As a general rule, a foreign non-established business must register for VAT in France as soon as a taxable supply is made. The following are some usual examples of taxable transactions:
- Domestic supply of goods not reverse charged: A supply of goods located in France to a French customer where the supply is not subject to reverse charge requires a VAT registration of the supplier
- Supply of services not reverse charged: Foreign non-established businesses supplying services on which French VAT is due must register for VAT. These services are rather exceptional, as the general B2B rule would apply
- Import: Importing goods into France requires a VAT number before importation
- Export: Exporting goods to a non-EU country requires a VAT number before the export is made
- Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT
- Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT
- Distance sales above the threshold also require a VAT number. See French distance sales rules for more information
A voluntary registration is not possible in France. This is, companies cannot register if they have not made a taxable transaction.
There is no registration threshold for non-established companies in France. Any company without a PE that performs taxable transactions should register for VAT.
Fiscal representative requirements in France
Non-EU businesses must appoint a French fiscal representative when registering for VAT purposes in France. The fiscal representative is jointly and severally liable for the tax liabilities of the company.
EU businesses must register directly for VAT purposes. This means that the legal representative of the company signs the registration form without any local French involvement. Companies registered directly in France can appoint and agent to take care of their VAT obligations. This agent (so called "mandataire fiscal") is not jointly and severally liable for the tax liabilities of the business.
French VAT groups
There is only an administrative simplification for VAT groups in France. VAT groups are not treated as a single taxable person and intra-group supplies are not disregarded. Each individual entity has its own VAT obligations, they need to file their own VAT return and issue invoices from their VAT number. However, all VAT due can be consolidated 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.
Permanent establishments cannot, as a general rule, be part of the VAT group. Regarding liabilities, although the payment is made by the head of the group, each entity is jointly liable for the VAT payment.
The following conditions must be met in order to create a VAT group:
- The head of the group must hold at least 50% control of each member
- Accounting periods of all group members must be the same. Also, the VAT regime should be the same and they all need to file monthly VAT returns
- Creating a VAT group requires an application by the head of the group once each member has given written consent to be part of the group
- Each group member files Corporate Tax returns electronically to the Department for large businesses in France (turnover exceeding €400,000,000)
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French consignment or call-off stock
France allows a consignment stock simplification when the applicable conditions are met.
Normally, an intra-Community acquisition followed by a local sale requires a VAT registration. However, where a) these goods are stored for less than 3 months and b) the parties have a written consignment agreement in place, the VAT registration can be avoided.
For example, if a jewellery business moves stock from another EU country to a warehouse location in France, a VAT registration is not required provided these goods stay for less than 3 months in the warehouse and the parties have reached a consignment agreement. The customer will therefore make an intra-Community acquisition when the goods are withdrawn from the warehouse. This customer should also report the purchase in the "Déclaration d´Echanges de Biens"."
Bad debt relief in France
Bad debt is allowed in France. A business can claim VAT back when this amount has not been collected from the customer. The condition is however that the supplier has exhausted all legal remedies to get the invoice paid. In practice, bad debt would be allowed when the invoice has been written off and legal actions have been taken.
Regarding formalities, the business must send the customer a copy of the relevant invoice with the following wording: "facture demeurée impayée pour la somme de €… (net amount) et pour la some de €… (VAT amount) qui ne peut faire l´objet d´une déduction (article 272 Code Général des Impots)"
This VAT will only be deducted by the end of the second year following the year in which the debt became irrecoverable. The corrected amounts are reported in box 21 of the return.
More information (in French) can be found here.
French import VAT deferral and postponed import VAT accounting
Normally, import VAT is paid upon arrival of the goods. However, to compensate for the cash flow disadvantages of these rules, most countries allow simplification where this VAT is either paid at a later stage (so called "import VAT deferral allowance") or import VAT is reverse charged in the next VAT return of the business importing the goods. This system is usually referred as "postponed import VAT accounting". France has introduced both systems, postponed import VAT accounting and Import VAT deferral allowance.
Postponed import VAT accounting
Postponed accounting of import VAT is allowed in France since 2015. This system has been extended to all customs operators. In order to benefit from this simplification, an application must be sent to the French tax authorities.
Authorized Economic Operators will be deemed to comply with all four conditions applicable to benefit from this simplification, although a separate application is still required for these taxpayers. Non-EU companies will have to appoint a customs representative to benefit from this regime.
Import VAT deferral allowance
Import VAT deferral is also allowed. Payment of import VAT can be paid up to 30 days after the import was made (non-simplified custom clearance) or up to the 25th day of the month following the month in which the import was made (simplified customs clearance).
Customs (bonded) warehouse and VAT warehouse in France
Customs or bonded warehouse is available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero rated. This regime is only available for EU based companies. An application needs to be submitted to the Customs authorities and, once approved, taxpayers should issue invoices for sales under Customs warehouse regime with a reference to the authorization number received and the name of the Customs warehouse.
VAT warehouse is available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. Limit fiscal representation may be used on VAT warehouse transactions. Also, the warehouse keeper is liable to record all movement within the VAT warehouse.
Global VAT numbers – French limited fiscal representation
Global VAT numbers, also known as freight forward VAT numbers or limited fiscal representation, are allowed in France. This is known as "Représentant Fiscal Ponctuel". Where a limited fiscal representative is used, EU and non-EU companies avoid a VAT registration in France.
This regime only applies to the following transactions:
- Goods released from a customs or VAT warehouse and subsequently exported or sent to another EU country (intra-Community supply)
- Import of goods followed by an intra-Community supply
The limited fiscal representative must be a French taxpayer duly registered at the customs authorities. This representative is liable to report all movements of the represented EU and non-EU business in one single quarterly VAT return. DEB/Intrastat returns are also due by the limited fiscal rep for these transactions.
French cash accounting
France has not introduced a cash accounting scheme for small and medium enterprises.
In general, VAT is accounted on a cash basis by all service providers.