French VAT Guide for Businesses
France was one of the first countries to introduce an indirect tax system. Following a major tax reform beginning in 1966, Value Added Tax (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).
What is the Standard VAT (TVA) Rate
Number of returns per year: 12
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.
Requirement to Register for VAT
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.
VAT Filing Frequency
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.
Agents and Fiscal Representatives
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.
Submission must be done electronically regardless of threshold and annual turnover.
When did France introduce SAF-T?
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.
Whenever the business supplies standard-rated or reduced-rated goods or services it must issue a VAT invoice. However, there is no need to issue a VAT invoice if the customer is not VAT registered, for zero-rated supplies, if the customer operates self-billing arrangements or for gift of goods on which VAT is due.
It is possible for suppliers to issue one collective invoice for a number of supplies if the following conditions are met:
- Several supplies to the same client are made during the same month;
- The supplier issues a sequentially numbered document for each supply showing the name and address of the customer, the date of the supply, the quantity and the nature of the goods or services supplied; and
- Both the supplier and the customer keep one copy of this document in their books
Invoices in France are required to include the following information:
- Seller’s name, address and VAT identification number (an identification code composed of 13 characters, starting with FR if the supplier is a person registered in France. The last two digits constitute a control number).
- Buyer’s name and address.
- Tax representative’s name, address and VAT identification number (if applicable).
- quantity and description of the goods or services.
- Date of issue.
- Time of supply and the time of prepayment, if they differ from the date of the invoice.
- Net value for each item.
- VAT rate.
- Total VAT amount payable, total net value and total VAT per rate.
- For exempt supplies, a statement that an exemption applies and a reference to the article in the CGI or VAT Directive upon which the exemption is based.
- Any discounts or rebates applicable.
- The date of payment if prior to the date of delivery or date of performance.
- A sequential invoice number which must be chronological and continuous
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