France is one of the EU countries that participates in the VAT or Value Added Tax concept. In France, it is formally known as the Taxe sur la Valeur Ajoutée, or more commonly, TVA and it was introduced back in 1954, before other VAT countries such as Germany and Italy and the rest of the EU adopted it formally in 1968. Interestingly, the VAT was first introduced in France, and they were therefore the VAT pioneers who were followed closely by Germany and then by other EU member states.
The European Union VAT Directives are what guide the French VAT compliance and regulation and they are embedded and threaded into the local General Tax Code which is enforced and regulated by Legislation Fiscale administers as well as the regional tax offices.
Foreign Companies VAT Registration in France is required if you are considered a ‘non-resident’. This means you will likely have to comply with the French VAT rules and regulations which includes registering for a VAT number and following compliance rules such as VAT invoices and pay VAT dues on a regular basis.
If you are unsure if you are a non-resident trader or if you are required to comply with VAT regulation or register for a VAT number, here are some guidelines. If you are not from France and your business is not headquartered in the country and you:
- Deliver goods in France to non- taxable individuals and consumers;
- acquire goods in France through intra-community or related business activity or transactions;
- import goods into France from other countries;
- provide a service such as building services, electronic service or transportation lease/ contracts;
- participate in what is formally known as ‘distance selling’ from a EU or foreign country. If you are within the EU this applies if you exceed pre-tax or pre-VAT sales of 35.000 € in a calendar year;
- hold goods in warehouses for longer than a period of 3 months (90 day) at a time;
- hold or organize events, exhibitions, training and/ or tradeshows in France that requires any sort of paid admission of any kind or value.
The internet is becoming one of the most popular sales points for both individual consumers and businesses as consumers as well. The sales to European Union consumers via the internet has grown significantly and is projected to make up at least 30% of EU retail selling within the next 5 years.
With the internet being as popular as it is, Foreign Companies VAT Registration in France is being updated to accommodate this complex selling platform. Platforms such as Amazon and eBay are closely monitored as many countries, especially in the EU have experienced fraudulent or suspicious activity on these sites as well as tax evading schemes and sales designs through re routing and complex selling schemes through third parties, etc.
As it stands now, retailers may sell to individuals in the EU under local VAT rules (if they are a company within another EU state) which means that if you are a German retailer, you can apply 19% If selling to a French consumer instead of the French rate of 20%. This is the case until the retailer reaches the threshold at which point they are required to charge the VAT Of the country where the consumer resides and they must register as a non trader in that country.
VAT Registration Requirements
Foreign Companies VAT Registration in France requires:
- a VAT certificate that proves the business is registered in another EU state (if applicable);
- proof and a copy of your Articles of Association to prove the legitimacy and purpose of your business and business operations;
- an extract from your national trade register to prove that you are who you say you are and your business operates under legitimate pretenses and does what you say it does.
Upon completing your application and submitting the above mentioned documents you must submit it with the Service des Impôts des Entreprises within two weeks from the time you start business activities in France.
French VAT Rates
Foreign Companies VAT Registration in France requires knowledge that the French standard VAT is 20% on taxable goods and services. There is a 10% reduced VAT rate for certain consumer goods that vary from non-alcoholic beverages to admission museums and amusement parks. Make sure to look into this list to see if what you are looking to sell falls within the reduced VAT rate. There is also a 5.5% reduced rate for certain equipment, consumable goods and other products and services. 2.2% is the VAT rate for communication related products and services such as newspapers and television licence fees.
French VAT Compliance
French VAT rules and requirements include:
- issuing invoices annually with full disclosure details that can be formally found and reviewed in the French VAT Act;
- electronic invoices that are complete, authentic and legitimate;
- consistent correct customer invoicing process and systems;
- processing credit notes and all corrections;
- using the correct currency and exchange rates.
If you need further help with French VAT registration, give our experienced advisers a call or fill in the form below for free and no obligation advice.