France

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VAT-registered businesses outside of the European Union are eligible to recover VAT on business costs from France under the 13th Directive.

VAT in France: An Overview

In France, the value-added tax (VAT) is referred to as TVA—taxe sur la valeur ajoutée. VAT was fully introduced in France in 1968, making the country one of the first to adopt a VAT scheme, at an initial rate of 19%. 

Since then, VAT France rates have remained remarkably consistent and above the minimum standard set by the European Union. The most recent change occurred in 2014 when the standard value added tax rate increased from 19.6% to the current 20%. 

Current VAT Rates in France

When it comes to paying VAT, France has five rates, which are categorized as follows:

• Standard (20%) – The standard VAT rate covers any good or service that doesn’t meet the qualifications of the reduced categories. Most products land here.
• Intermediary (10%) – The first reduced rate applies to some forms of transportation, certain foods and non-alcoholic beverages, many pharmaceutical products, renovations and cleaning services, and some cultural activities (such as zoo and monument admission fees).
• Reduced (5.5%) – The second reduced rate applies to essential groceries and water supplies, most books, feminine hygiene products, some medical supplies, and more.
• Special (2.1%) – The third reduced rate is reserved for specific medications and medical supplies, livestock animals, approved newspapers and periodicals, and admission to some cultural events.
• Zero (0%) – The VAT-exempt rate includes international and domestic travel via air or rail. A transaction may also be exempt from the VAT rate if it’s subject to another tax rate.  

If your company pays VAT on costs incurred in France and is not a registered business in the country, you can apply for a VAT refund. France gives you until June 30 of the following year to submit a VAT refund.

How to Pay VAT Bills in France

There are three potential schedules for VAT reporting in France:

• Monthly – Most businesses fall under the monthly reporting scheme unless otherwise specified.
• Quarterly – If your annual VAT liability stays below €4,000, you can file your VAT returns quarterly.
• No set schedule – Under special circumstances, businesses need only file when undertaking certain activities.

No matter which rhythm you fall under, you’ll make your VAT payments via télépaiements. In other words, you’ll pay your bill online using direct debit, which can take up to three days to process. Payments must be made via the tax ministry’s online service.

Whether you file monthly or quarterly, your payment deadline falls between day 15 and 24 of the month following your tax period.

France VAT Compliance

If you import goods into France, buy or sell French goods, or store products in a French warehouse, you may need to complete VAT registration. Any business that registers for French VAT must comply with the country’s tax laws.

To comply with French VAT regulations, you must adhere to the following instructions:

• Sign all documents and submit them on time
• Include the necessary disclosure details on all invoices
• Utilize the approved foreign currency rates
• Keep all accounts and records for a minimum of 10 years

To learn more about French VAT compliance or if you have concerns about laws and regulations from this EU member state, be sure to contact VAT IT today.

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Sources:

Organisation for Economic Cooperation and Development. Consumption Tax Trends – France. https://www.oecd.org/tax/consumption/consumption-tax-trends-france.pdf

European Commission. What is VAT? https://ec.europa.eu/taxation_customs/what-vat_en 

economie.gouv.fr. Quels sont les taux de TVA en vigueur en France et dans l’Union européenne ? https://www.economie.gouv.fr/cedef/taux-tva-france-et-union-europeenne

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