Umsatzsteuer in Frankreich

The VAT in France –
What online merchants
need to know

In Europe, cross-border deliveries of goods are part of everyday business. There is a lively trade between the neighbouring countries of Germany and France, for example. For traders, the handling of turnover tax plays a significant role. What needs to be considered?

Introduction

The French VAT

The French term for value added tax is “Taxe sur la valeur ajoutée” – TVA for short. The EU founding member was the first country to have a turnover tax. VAT was introduced in France as early as 1954 and was extended to the entire economy in 1968. Since then, the various tax rates have been adjusted again and again.

The VAT rates in France

“Taux normal de TVA” (standard VAT rate): It is 20% and applies to most sales of goods and services. This rate applies to all products and services not regulated by specific VAT rates.

“Taux réduit de TVA” (reduced tax rates)

  1. Reduced rate of 10%
    This intermediate rate applies to passenger transport, accommodation, furnished rental properties or classified campsites, certain renovation and maintenance work on dwellings, restaurants, non-refundable medicines, entrance fees to cinemas, fairs, museums, zoos, cultural sites, exhibitions, etc.
  2. Reduced rate of 5.5%
    The reduced rate applies to foodstuffs, the supply of building land to non-profit housing associations, the supply of new social housing, equipment and services for the disabled, gas and electricity subscriptions, the supply of heat from renewable energy sources, books (including digital), live performances, social housing and works to improve the energy quality of accommodation, the supply of works of art by their author or his legal successor.

“Taux particulier” (special tax rate): This is 2.1%. It applies to medicines reimbursed by social security, television licence fees, sales of living animals for slaughter and sausages to persons not subject to this tax, premieres of theatrical performances or classical works restaged, and certain circus performances involving only original creations.

Links to official websites of the French tax administration

Input tax refund

Especially when companies operate cross-border, they also have to pay VAT. Then, of course, the question of input tax deduction arises.

Suppose a company from Germany has registered for VAT in France and has also paid French VAT based on invoices from companies in France. In that case, the input tax can be claimed accordingly in the VAT assessment in France.

Suppose a company from Germany has paid VAT in France and is not registered there. In that case, the input tax refund procedure can be considered for reimbursement. Detailed information on the procedure can be found here, as well as further information from the French administration.

Declaration duties in France

Only in a few cases is it not necessary to file a VAT return in France. For various supplies and services, special VAT rules apply, for example, for small businesses, flat-rate farmers, tax-exempt persons, certain other services according to § 3a paragraph 3, transport services (§ 3b UStG) and restaurant services (§ 3e UStG).

As a general rule, if VAT has to be paid in France, the business that owes the tax must also register there, unless it participates in the One-Stop-Shop.

By the way: France also grants VAT exemptions, flat-rate taxation and relief for small businesses.

Services to a business in France (B2B)

Regarding other services to a business, according to § 3a paragraph 2 UStG, the so-called reverse-charge procedure (French: autoliquidation) applies. Therefore, the German company does not show any VAT but must refer to the change of tax liability in the invoice and indicate both its VAT identification number and the VAT identification number of the company in France.

Attention: In this context, recapitulative statements (ZM) to the Federal Central Tax Office (BZSt) should not be forgotten.

Deliveries of goods to businesses in France (B2B)

Suppose there is an intra-Community delivery of goods (§ 6a UStG) from a company in Germany to a company in France. In that case, the German company does not have to pay VAT, and the company in France must pay tax on the purchase. The prerequisite for this is that the goods are delivered or dispatched to France; the recipient is a VAT-liable business in France and uses a valid VAT identification number vis-à-vis the company in Germany.

Deliveries of goods to private persons (non-entrepreneurs) in France (B2C)

For deliveries of goods to private customers in France, VAT must always be shown and paid in France. The company must then register accordingly in France. However, suppose only a few goods are supplied to private individuals in France. In that case, there is a simplification. Since 1 July 2021, an EU-wide supply threshold of 10,000 euros applies here (until 30 June 2021, the de minimis threshold of 35,000 euros applied in France). If this threshold is not exceeded, taxation takes place in Germany. This threshold also applies to other services according to § 3a paragraph 5 UStG – i.e., electronic services, telecommunications, radio, and television services. However, the entrepreneur can waive the application of the supply threshold (§ 3c paragraph 4 UStG).

Services to private individuals (non-entrepreneurs) in France (B2C)

Suppose a company from Germany provides other services to private customers in France. In that case, German VAT must generally be shown (§ 3a paragraph 1 UStG). However, in the case of telecommunications, radio and television services, and electronic services (§ 3a paragraph 5 UStG), the country of destination principle applies – i.e., in principle taxation in France (note: delivery threshold 10,000 euros, see the following explanations). The reverse-charge procedure does not apply to private customers.

Warehousing in France

If a merchant with a registered office outside France accesses a warehouse in France, some regulations must be observed.

Many merchants offer their products via Amazon FBA. As part of the fight against fraud, the French tax authorities have obliged Amazon to provide data such as the VAT identification number of a seller’s Amazon business from the previous year by 31 January each year.

The French tax authorities can use this data to check whether the merchant complies with French tax requirements. If the guidelines are violated, the Amazon.fr account can be blocked.

Important note

Special VAT rules apply to various supplies of goods and services, for example, for small entrepreneurs, flat-rate farmers, tax-exempt persons, certain other services according to § 3a paragraph 3, transport services (§ 3b UStG) and restaurant services (§ 3e UStG).

As a general rule, if VAT must be paid in France, the business that owes the tax must also register there, unless it participates in the One-Stop-Shop.

By the way: France also grants VAT exemptions, flat-rate taxation and relief for small businesses. Extensive information can be found here.

When do I have to register as a merchant in France?

Few EU businesses must register for VAT in France when providing services to local French businesses. In most cases, the reverse-charge procedure takes place.

Registration is mandatory in the following situations:

  • When importing goods into France, if the customer is not a French business with a local VAT registration (so-called reverse-charge procedure).
  • The purchase and sale of goods in France if the customer is not a French business with a local VAT registration (so-called reverse-charge procedure).
  • The storage of goods in a French warehouse of consignment (warehouse of a supplier or service provider located in the vicinity of the customer or buyer) for a period of at least three months.
  • Sale of goods to French consumers via distance selling (internet, catalogues, etc.)
  • Self-sufficiency in goods as a business
  • Certain leasing services

How does registration with the French tax authorities work?

Registration as a business in France can be done, for example, via the official website. Here, non-resident merchants can obtain the VAT number (USt-Nr) necessary for the regular advance VAT returns (UStVA).

The French tax authority

Where does the VAT declaration take place in France?

Service des impôts des entreprises étrangères
10, rue du Centre
TSA 20011
93465 Noisy-le-Grand Cedex
Phone: + 33 (0)1 72 95 20 31
Email: siee.dinr@dgfip.finances.gouv.fr

Website: www.impots.gouv.fr

Attention: However, much of the information is filed in French. Companies from EU member states are not obliged to appoint a fiscal representative. However, in case of language difficulties, it may be helpful to seek assistance. Therefore, a company from an EU Member State may voluntarily decide to appoint a fiscal representative.

What must be reported in a VAT return in France?

In general, there is a duty to declare taxable transactions in France and declare the payment charge or refund claim owed by the taxpayer. This is done with the CA 3 form.

Companies must comply with strict declaration obligations in France – including regular VAT returns. Anyone who regularly carries out a turnover in France must submit a monthly declaration electronically – similar to the advance VAT return (UStVA) in Germany. If no turnover was carried out in a month, a zero return must be submitted. The declaration could be submitted quarterly if the turnover tax was less than 4,000 euros in the previous year. Those who do not comply with their declaration obligations must expect considerable penalties, such as late payment and late payment surcharges or fines.

For the declaration obligations, this website of the French tax administration provides information.

VATRules – The hassle-free and reliable EU VAT database

Every standard rate, every reduction, every exemption

Your entire product range precisely classified in the currently valid VAT logic of each EU member state (plus Great Britain).
Certified, system-integrated and permanently updated.

VATRules knows all the VAT rates you have to calculate in the EU-27 and UK and assigns them to your product groups.

Is the sale of goods taxable or tax-free? Which tax rate is applicable? — Regular, reduced or super-reduced? Which exemptions and re-exemptions apply?

VATRules applies this tax content in your ERP or shop system. Article-specific, always up-to-date, and for all EU-27 (plus the UK).

How does invoicing and invoice transmission work in France?

Invoicing

In France, invoices must also be issued according to specific requirements. Businesses must ensure that the invoice contains the mandatory information according to Art. 226 of the VAT System Directive.

More info

Invoice transmission

In France, invoices can also be transmitted electronically. At the end of 2020, it was announced that the electronic transmission of invoices in the B2B sector would even be mandatory from 1 January 2023. This plan has now been postponed once again: From 2024, the changeover will begin gradually, initially for large companies, from 2025 for medium-sized companies and 2026 for small companies.

More info

Simplified VAT reporting: The EU One-Stop-Shop

With the EU’s One-Stop-Shop procedure, online merchants can benefit from simplification: Instead of registering in different countries for VAT purposes, the One-Stop-Shop (OSS) can be used.

All reporting obligations and payment obligations are handled centrally at a single point.

OSS+

The smoothest way to the EU’s One-Stop-Shop

OSS+ takes care of the cloud-based extraction and mapping of your VAT-relevant data from various marketplaces and shops. OSS+ handles the declaration preparation for your tax advisor, so he can easily process it for the One-Stop-Shop (OSS).

Alles zum OSS+
Special features

Third country territories in France

France includes not only the mainland in Europe but also several islands (for example, Corsica) and the overseas territories, in French “La France d’outre-mer (DOM)”. Essentially, these are former colonies.

Although these territories belong to France under sovereign law, different regulations apply in some cases – as well as VAT.

For example, section 1.10 of the VAT Application Decree clarifies that France plus the Principality of Monaco does belong to the Community territory – but without Guadeloupe, French Guiana, Martinique, Mayotte Reunion, Saint-Barthélemy and Saint-Martin. These territories are classified as third country territories, the so-called départements et régions d’outre-mer.

Contact

Easy cross-border trading with products from eClear


    *mandatory field

    Individual demo
    Do you have questions about our products? eClear’s team of experts will answer them and present you with the proper integration solution for your system landscape.

    Please send us your request via the contact form. We will get back to you as soon as possible.

    Book a free demo now