French VAT rules are based on regulations drawn up by the EU, of which France was a founding member. The standard French VAT rate is currently 20%.
There are also reduced rates of 10% for pharmaceuticals, passenger transport, admission to cultural sporting and entertainment events, hotels, accommodation and restaurants; 5.5% for medical, foodstuffs, e-books and books; and 2.1% for newspapers and other pharmaceuticals.
As an EU member state, France is obliged to implement the VAT directives, which provide guidance on VAT. Where there is a conflict, the European Directive takes precedence.
France VAT law
The French VAT law is contained within the General Tax Code. It is administered by the ‘Direction Générale des Douanes et Droits Indirects’.
French VAT registration
With the implementation of the European Single Market Initiative in the 1990s, it became possible to buy and sell goods without a local company, – known as non-resident VAT trading. There is no VAT threshold in France for the registration of non-resident traders, but you will need one to record transactions and your French customers will want proof that you have obtained one.
There are strict rules on the situations where a registration is permitted. Common scenarios which require a French VAT registration include:
- Importing goods into France,
- Organising live events, conferences, etc. in France,
- Holding goods in a warehouse in France as stock for resale longer than three months,
- ‘Supply and install’ services over 12 months,
- Selling goods from France to other EU countries,
- Distance-selling to private individuals, e.g. internet retailing.
The rules on French VAT registration were tightened in September 2006, broadly excluding VAT registrations to non-French companies where the final customer has a live French VAT registration themselves. Under this scenario, the reverse charge should be applied. Registering for French VAT generally takes four weeks, although this can vary.
French VAT fiscal representative
EU companies are no longer required to appoint a full VAT fiscal representative for the French tax authorities. However, non-EU companies do need one. A new regime, permitting companies from certain non-EU countries to avoid this requirement, was launched at the start of 2013. If the home state of the non-EU company has signed a mutual assistance agreement with France, then the obligation is dropped.
French VAT compliance
There are detailed rules controlling the recording and processing of French transactions. These include guidelines on:
- French invoice requirements
- Foreign currency reporting and translation
- Credit notes and corrections.
French VAT rates
The standard VAT rate in France is 20%; reduced rates are 10% for pharmaceuticals, passenger transport, admission to cultural sporting and entertainment events, hotels, accommodation and restaurants; and 5.5% for medical, foodstuffs, e-books and books; and 2.1% for goods from chemists and some newspapers.
French VAT returns
Companies with a French VAT number must submit regular returns detailing all taxable supplies (sales) and inputs (costs). Generally, returns are submitted monthly in France. VAT returns in France are due by the 19th of the month following the reporting period.
French Intrastat and EC sales lists
In addition to VAT returns, in France, companies may be required to submit additional statistical information. The French Intrastat and EC sales list is combined into one filing, the ‘Déclaration d’Echange de Biens’ (DEB). – It should be filed 10 days after month end.
French VAT refunds
If a foreign company is providing taxable supplies in France, but is unable to obtain a French VAT number, or is incurring French VAT on local goods or services, then French VAT may be recovered through a VAT.