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.
- Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
- Import: Importing in France requires a VAT registration to self-assess the import VAT. This is because the postponed import VAT is mandatory in France.
- 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: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.
A voluntary registration is not possible in France for foreign non-established businesses. 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 permanent establishment that performs taxable transactions should register for VAT.
However, small established companies can benefit from special VAT regimes that simplify their compliance obligations – such as the franchise en base, or the simplified imposition regime (RSI). However, small established businesses subject to those special VAT regimes can voluntarily register for VAT purposes in France and start charging VAT in their sales. You can check here the official information about all VAT regimes in France.
A backdated registration is possible in France. Such backdated registration is required when a business applies for a French VAT number late. In this case, all missed VAT returns are due, and, if applicable, all corresponding VAT payments should be made.
Input VAT incurred before the VAT registration may be deductible concerning purchases of goods or services directly related to the economic activity (not for private use). In case a foreign business is willing to deduct VAT incurred while not VAT registered, normally, a retroactive VAT registration is required. In case no taxable transactions took place during the year on which input VAT was incurred by the foreign business, such VAT shall be recovered via the EU VAT refund mechanism or 13th Directive.
A limited VAT registration for foreign companies is possible in France. This is known as Immatriculation à des fins exclusivement douanières or VAT registration for customs purposes only, and VAT returns are not due under this regime – form CA3. This applies when the VAT registration in France is required only to comply with customs obligations – use of VAT number and submission of the eventual ESL and Intrastat returns. These are the transactions that arise a limited VAT registration in France:
- Intra-Community acquisitions in France
- Deemed intra-Community supplies in France, this is, movement of own stock out of France to another EU country.
Find here the official information about VAT registration for foreign companies in France.
From January 2023 the registration application must be submitted via the new portal for company's formalities.
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. After Brexit in 2021, UK companies are not required to appoint a fiscal representative for VAT purposes in France.
Businesses from other countries with whom France signed an agreement for mutual assistance also do not need a fiscal representative. The full list of countries who do not require a fiscal representative is published on this page from the French authorities.
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 an 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.
From January 2023, the authorities introduced a new requirement for the French fiscal representation. To represent a client for VAT purposes, the fiscal representative must obtain accreditation from the tax office. This accreditation is a prerequisite for all new VAT registrations.
The fiscal representation accreditation involves meeting specific criteria and complying with regulations set forth by French tax authorities. These criteria aim to promote transparency and accountability within fiscal representation arrangements and include:
- Capacity Condition: The tax representative must demonstrate the presence of an administrative infrastructure, as well as sufficient human and material resources to effectively fulfill their representation duties.
- Solvency Condition: The tax representative must exhibit financial solvency in relation to their obligations as a representative. Alternatively, they may establish a bank guarantee equivalent to a quarter of the annual VAT liabilities of the foreign company they represent.
- Morality Condition: The tax representative must have a clean record, free from serious or repeated offenses against tax provisions.
The above criteria are described in Article 289A of the French Tax Code.
French VAT groups
In January 2023, France introduced the full VAT groups regime. Previously, French companies could opt for an administrative simplification that 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 had file a monthly consolidating VAT return.
Where more than one taxable persons are closely bound by financial, economic, and organizational links, these companies may form part a VAT group and be treated as a single taxable person for VAT purposes in France. A VAT group implies that there is a company and one or more controlled entities.
As regards the VAT group conditions, financial links exist when the same person or business directly or indirectly holds more than 50% of the shares of a member. Organizational links exist when the management of the controlled entities is fully dependent of the controlling entity. Economic links exist where the entities exercise one main activity of the same nature, of interdependent activities, complementary or pursuing a common economic objective, of an activity carried out in whole or in part for the benefit of the other members.
In addition, the following VAT grouping rules apply in France:
- 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».
Find here the VAT news article published by Marosa about the introduction of the full VAT groups simplification in France.
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French consignment or call-off stock
The EU introduced a call-off stock simplification that all EU Member States must implement. This was put into place so that businesses that operate under a consignment stock structure do not have to VAT register in the country of destination. The EU introduced an EU wide simplification for call-off stock scenarios that all EU Member States must implement. This simplification allows businesses to operate under a consignment stock structure without having to VAT register in the destination country. France has implemented this simplification.
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 that the supplier has gone through all legal procedures to get the invoice paid. In practice, bad debt relief is possible when all legal actions have been taken and the supplier sends a duplice of the unpaid invoice stating that the original invoice was not paid and therefore, the customer cannot deduct the correspondent input VAT.
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 introduced an automatic and mandatory application of postponed import VAT accounting, hence allowing reverse charge on all imports made by those taxpayers with a French VAT number.
French Postponed import VAT accounting
In France, it is not necessary to make any specific request or meet any requirements in order to apply import VAT reverse charge. The VAT returns will be pre-filled with the import VAT declared at Customs.
French tax authorities will pre-complete import VAT amounts as due and deductible (reverse charge) in VAT returns, so that taxpayers can review those amounts that are automatically populated before proceeding with submission of the VAT returns.
For more information on this update, please refer to the article published in this website.
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.
French cash accounting
Taxable persons that do not make any intra-Community supplies or whose annual turnover is less than EUR 300,000 (when intra-Community supplies are made) are able to participate in the cash accounting scheme in France. Under this scheme, VAT is due on the goods or services supplied when the payment or partial payment by the customer is received.