As France is a member of the European Union, the rules applicable to French VAT ( TVA in French ie “Taxe sur la valeur ajoutée”) are those defined by the EU VAT directives.In France there are four VAT rates:
- The standard rate of 20% applies to all transactions not expressly subject to another rate.
- The reduced rate of 10% covers mainly passenger transport, certain shows, games and entertainment, medicinal products not reimbursed by the social security, accommodation in hotels, furnished apartments or classified campsites, sales of food and drink for consumption on the premises, including canteens (except school canteens), unprocessed agricultural, fishery and poultry products not destined for human consumption, products for use in organic agriculture, and new middle-income social housing.
The 10% rate is also applied to improvements, conversions and maintenance work on residential premises more than two years old, except for the portion corresponding to the supply of certain large items of equipment.
- The reduced rate of 5.5% applies mainly to basic necessities and certain cultural products and services.
- A specific 2.1% rate charged in particular on press publications and medical drugs reimbursed by social security.
- Special rates apply in the overseas départements (Guadeloupe, Martinique, La Réunion) and in Corsica.
For non-residents, the performance of any VAT taxable sale of goods or service in France can give rise to French VAT registration and filing obligations.
Liability to French VAT entails the following obligations:
- reporting the existence, identification or discontinuation of an activity,
- keeping itemised accounts supported by vouchers or a special ledger,
- issuing invoices showing the price excluding VAT, the rate, the amount of VAT and the VAT identification number of the seller or service provider and, for certain intra-Community transactions, that of the buyer or customer,
- filing monthly or quarterly turnover returns, depending on the annual amount of tax payable,
- filing European Sales Lists for goods and services for certain intra-Community transactions for statistical and tax purposes,
- voluntarily paying the tax to the Business tax service (service des impôts des entreprises, SIE) on submitting the turnover return or in instalments paid in advance.
However France does have a general reverse charge rule applicable when the supplier or service provider is non-resident.
Moreover, under EU VAT rules, there are possibilities of organising flows of goods and services so as to avoid any unnecessary registration and filing obligations.
Triplet have experts who can analyse the flows of goods and services so as to ensure that there are no unnecessary registration and filing obligations required in France.
If such obligations do apply, Triplet can provide operators assistance and information to ensure that they are fully compliant, thereby avoiding payment of penalties, and that the goods and services flows do not generate any unnecessary cash flow issues.
For further information on French indirect taxes please click here