France was one of the first countries to introduce an indirect tax system. Following a major tax reform beginning in 1966, VAT or Taxe sur la Valeur Ajoutée (TVA) was introduced in 1968 in France applicable to all business transactions.
The authority responsible for VAT is the Ministry of Economic Affairs and Finance (Ministère des Finances et des Comptes publics), including the Junior Minister for Budget and Public Accounts (secrétaire d’Etat au Budget).
In France, the standard-rated VAT is 20%. There is an intermediate VAT rate of 10%, which is applicable for basic necessities, such as food and beverages, passenger transport and books
A 5.5% reduced-rate can be applied for specific goods and services, such as medical appliances or electricity, and a super reduced-rate of 2.1% is applicable for the sale of certain publications or medicines.
Businesses from the EU that have no permanent French establishment can register with the Tax Authority by submitting form EE0 or form no. 1984 – SD/IMP form.
Established entities in France can register via submitting form M0. If the turnover of the business is below €82,00 for supplied goods, €33,100 for supplied services, €42,900 for lawyers and artists, the company is automatically VAT exempt. However, if the threshold is exceeded, the business has to register for VAT in France.
Non-EU businesses need a fiscal representative in France, and can register for VAT with form EE0, and submitting a POA for fiscal representation, and another for VAT credit refund.
There is no threshold for businesses that are not established in France, they have to register for VAT when they perform VAT-able activities.
The filing frequency of VAT returns is monthly for businesses with an annual turnover above €818,000 (for goods) or €247,000 ( for services). In case the turnover is below these thresholds, the filing frequency can be yearly.
Furthermore, if the annual VAT due is less than €4,000 per year, the filing frequency might be quarterly.
Submission must be done electronically regardless of threshold and annual turnover.
Our VAT technology platform, Comply helps business manage complex, country specific tax requirements including France’s Taxe sur la Valeur Ajoutée (TVA) obligations.
Using AI and machine learning, our technology puts your VAT data through over 300 automated VAT rules, checking for errors, and preparing VAT returns for approval and submission. Comply provides a full audit trail for the French Tax Authorities.
It is possible for suppliers to issue one collective invoice for a number of supplies if the following conditions are met:
Invoices in France are required to include the following information:
French businesses have the opportunity to appoint an agent to act on their behalf regarding their VAT compliance, however, it is not compulsory.
Taxable persons that are not established in the country must appoint a French VAT representative, who is liable for all their VAT obligations.
Non-EU businesses are obliged to appoint a fiscal representative in France, but EU businesses don’t have such obligation
France introduced SAF-T reporting in 2012 and it has been compulsory for tax audits since January 1st 2014.
If the financial accounts of a taxable person is kept in computerized systems, they have to present them in a dematerialized file for a Tax Authority audit.
All accounting data entered in journals for a financial year is submitted in a single file, the accounting records file (Fichier numérique des écritures comptables, FEC) in a chronological order
Our VAT experts, Lisa Dowling and Barbara Barcsik, discuss the challenges and complexities of SAF-T and ‘VAT in the Digital Age’.
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