Penalties For Not Using Direct Debit for French VAT Payments
The French tax authorities are starting to send penalties for payments not processed by direct debit.
As explained in our French VAT manual, businesses are required to create an account in the tax authorities’ portal and link their bank account to it in order to set up the direct debit mandate required by the French tax authorities. This obligation was already in place, however, the tax authorities are now imposing penalties on any company not complying with French VAT payments via direct debit.
Setting-up direct debit for French VAT payments is particularly difficult for UK businesses, as UK bank accounts would often not be linked correctly. To solve this, UK companies would transfer their VAT payments to the bank account of the French tax authorities including as payment reference the name of the form, VAT number and period being paid. This solution is no longer possible and businesses are already receiving penalties for such practice.
Applicable penalties for late French VAT payments
France imposes high penalties for late filing and late submission of VAT returns. Penalty amounts are equivalent to 10% of the VAT due for late filing and an additional 10% of the VAT due for late payment. Therefore, if a VAT return and VAT payment are missed all together for single period, an automatic penalty of 20% of the VAT due will apply. You can read more information about French VAT penalties in our manual.
The VAT penalties regime in Europe changes from one country to another. Some countries like Spain, France or Portugal will impose an automatic penalty based on a rate of the VAT due (usually from 5% to 30%). Other jurisdictions are more lenient and will only charge late payment interest on first VAT payments missed. In the UK, businesses will get a warning on their first late VAT payment so that they are only charged a penalty if the conditions set in the warning (Surcharge Liability notice) are not met.
What to do if you received penalties from the French authorities?
Marosa offers a Euro bank account to set up your direct debit on French VAT payments. Our payment agency service is available for all countries requiring a local bank account for VAT payments. Please contact us for more information on how to make French VAT payments from your UK bank account.
If your business has made the VAT payment via bank transfer and you received penalties from the French tax authorities for not making your VAT payment via direct debit, we can assess the possibility of requesting a relief from these penalties on the basis of the VAT payment being made on time.