EU VAT guide – France

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How much is VAT in France?

The Standard VAT Rate(La taxe sur la valeur ajoutée (TVA)) in france is 20%.

Some supplies are exempt from VAT. This applies to business activities like education, health care, insurance, and banking services.

France VAT Rate	Rate Type	Coverage and imposition
20%	Standard	This applies to all taxable supplies of goods and services, with some exceptions;
10%	Reduced Rate	Certain accommodation services; entrance fees to museums, zoos, monuments, thermal establishments, passenger transport;
5.5%	Reduced Rate	Books in any medium; most food products;
2.1%	Reduced rate	Medicines;
0%	Zero rate	An exhaustive list of financial services; Intra Community supply; Export to non-EU countries.

The exact list of taxable transactions and allocated France VAT rate can be found in VAT France regulations.

VAT thresholds in France

Valuable information about the VAT threshold in France and applicable provisions can be found in the VAT legislation. Also, a helpful source of information is an interpretation of the appropriate information shared by Tax Authority officials.

VAT registration threshold for resident businesses: No registration threshold.

VAT registration threshold for non-resident businesses: No registration threshold.

VAT registration threshold for intra-EU distance sales of goods and B2C supplies of services: EU-wide harmonized threshold of EUR 10,000.

VAT registration threshold for non-EU established suppliers of Electronically Supplied Services: No registration threshold.

VAT Taxable Activities in France

A taxable person by France VAT Law is a legal person or individual who carries out economic activity independently, whatever the purpose or results.

Types of taxable activities that trigger the imposition of France VAT:

The supply of goods and rendering of services in France for consideration;
Receipt of reverse-charge services by a taxable person in France;
Export of goods;
Import of goods.

Other case scenarios exist where domestic or foreign businesses should impose France VAT on their transactions.

Tax Representative in France

For non-EU-established businesses, having a tax representative for all VAT compliance-related activities is mandatory.

For EU-established businesses, having a tax intermediary isn’t mandatory. Still, the economic operator could acquire the professional to ease up and streamline compliance challenges for its operations in the country.

VAT on Electronically Supplied Services in France

Electronically Supplied Services

In the landscape of the European Union’s VAT framework, Directive 2006/112/EC serves as a cornerstone, this relevance is also seen when providing necessary insights about Electronically Supplied Services (ESS).

In alignment with these EU-wide standards, France has adopted definitions referring to ESS into its national VAT legislation. Digital commerce is inseparable from keywords such as electronic services, digital services, or digital products.

These terms may appear to refer to divergent categories of services or goods. However, this variance often stems from the lack of a cohesive framework for the taxation and regulation of these services across contexts.

Following the logic of the EU’s VAT Directive, domestic regulators clarified the taxability rules surrounding the supply of digital services.

Taxability Rules for ESS

With the E-commerce regulatory package, bastions of EU law established a framework thanks to which taxability rules surrounding the distance sales of goods and Electronically Supplied services are coherent and, to a vast extent, uniform across Member States.

This guidance offers clarity and uniformity, ensuring businesses across the EU and beyond can easily navigate VAT regulations.

B2B supply of electronically supplied services – Regarding this type of transaction, where the purchaser is a legal person, the general place of supply rules should be applied

B2C supply of electronically supplied services – Non-resident companies should apply EU-harmonized VAT rules specifically designed for this purpose, i.e., the VAT rate of the consumer’s place of residence

B2C supply of electronically supplied services – Non-EU based suppliers should follow the EU harmonized rules regarding the place of supply without possibility to leverage the threshold of EUR 10,000

Place of supply rules for distance sales of goods and B2C ESS – If the annual turnover of the supplier is less than EUR 10,000, the EU merchant has the possibility to apply VAT rules of his country of residence or follow the OSS rules

Place of supply rules for distance sales of goods and B2C ESS – If the annual turnover of the supplier is above the threshold of EUR 10,000, the seller should impose the VAT rate of the country where the goods are dispatched or where the customer receiving the services is based

How much is VAT in France for Electronically Supplied Services?

VAT rate France: A standard VAT rate of 20% is applied in most cases on sales of Electronically Supplied Services in France

Example of taxable ESS in France:

Supply of digital products, such as software, connected changes, and updates of the software;

Website supply, web-hosting, distance maintenance of programs and equipment;

Supply of music, films, and games, including games of chance and gambling games;

Supply of distance learning;

Access or download of music to a physical device;

Access or downloading images, jingles, films, ringtones, and other audio output.

E-Commerce VAT Rules in France

On July 1, 2021, the European Union regulators made an important step concerning the update of VAT regulations raised by ever-growing demand of the digital economy.

The reforms serve a dual purpose: Firstly, they aim to make things easier for businesses engaged in the cross-border economy. Secondly, they seek uniformity in the tax landscape connected with e-commerce operations.

Highlights of the 2021 E-Commerce VAT Reforms:

Cross-Border Sales of Low-Value Goods: Adoption of coherent taxability scenario set forth for the operations covering imports of low-value goods to EU customers from non-EU territories;
Intra-Community Distance Sales: The reforms also revisited the VAT rules for goods sold and transported between EU Member States, streamlining the process to facilitate smoother intra-EU commerce.

Domestic Sales by Deemed Suppliers: Sales conducted within a single Member State, where both parties, i.e., the deemed supplier and customer are based.

Provision of B2C Services: The VAT implications for B2C supply of services, particularly those provided by taxable persons outside the customer’s residence, have been widened in scope and streamlined.

Evolution of VAT Special Schemes:

The update of the VAT Directive with the E-commerce package in mind is more than what has been explained above. The revision of the simplified schemes and introduction of the IOSS scheme represents an equally significant move by EU regulators.

These changes are instrumental in simplifying the VAT compliance process, especially for businesses engaging in cross-border e-commerce.

The E-Commerce VAT package made the following special schemes available:

Union One-Stop-Shop Scheme;

Non-Union One-Stop-Scheme;

Import One-Stop-Shop Scheme.

Overview of EU VAT Special Schemes

The Non-Union Scheme can be leveraged by:

Non-EU established businesses and those without fixed establishments in the EU.

The Non-Union Scheme covers B2C supplies of all services where the place of supply is within the Member State. If foreign businesses adhere to this scheme, it should be used to report all B2C supply of services.

The Union Scheme can be leveraged by

Taxable persons established in the EU for supplies of B2C services and intra-community distance sales of goods. The indispensable parameter for using this special scheme is that the customer is based in a Member State that is different from the one where the supplier is based.

Taxable person not established in the EU for intra-community distance sales of goods

Digital Marketplace established or not established in the EU for intra-community distance sales of goods and certain domestic supplies of goods

Import Scheme can be leveraged by:

Any taxable person who carries out distance sales of goods imported from third countries or third territories in consignments not exceeding the threshold of EUR 150

Taxable persons established in the EU, taxable persons non-established in the EU, and electronic marketplaces are eligible to use this type of special scheme.

OSS Return and Payment

The French tax administration doesn’t offer a simplified registration or reporting tool for electronically supplied services. However, taxable persons can benefit from the EU-wide OSS schemes.

The possibility of using these schemes depends on the nature of the service or product the business offers to end customers.

If what the merchant is selling doesn’t fit into the categories these EU rules discuss, the merchant should go through the standard process of registering for VAT and following the usual tax rules in France, just like everyone else.

OSS Return- In case France is the Member State of Identification(MSI)
VAT Return Name	One Stop Shop Scheme(OSS)
Reporting Period	Quarter
Submission Deadline	Q1-April 30; Q2-July 31:Q3-October 31; Q4-January 31
Payment Deadline	It is the same as for the electronic submission of the declaration
Payment Currency	EUR
Language	French or English
Tax Representative	For Union and Non-Union Scheme – No IOSS – if the taxable person is established outside the EU – Yes
Input Tax Credit	Not allowed in the OSS return
Archiving	10 years

Electronic Platform and Deemed Supplier Rules

In step with the European Union’s initiative to unify VAT rules, France has embraced the EU’s VAT guidelines within its national laws, paving the way for introducing the concept of deemed supplier and connected implication.

This concept sheds new light on taxability rules processed through the digital marketplace, positioning certain online platform operators as “deemed suppliers” under specific conditions.

Once these conditions are met, such operators are recognized as effective suppliers for VAT purposes, bridging the gap between digital facilitation and traditional supply chains.

The marketplace facilitator becomes deemed supplier for the below-indicated transactions:

When goods valued below EUR 150 are imported into the EU from non-EU countries or territories and sold to EU consumers by the original vendors.
When the goods, already within the EU and in free circulation, are sold to EU residents by vendors outside the EU, with no restrictions on the goods’ value.

This regulatory framework introduces additional responsibilities for deemed suppliers, vastly changing this sales model’s VAT obligations for taxable entities. In this multi-sided business model, we have two separate transactions:

The initial supply from the original vendor to the digital platform is recognized as a business-to-business (B2B) transaction.
The subsequent supply from the platform to the final consumer is classified as a business-to-consumer (B2C) transaction.

This ensures compliance and facilitates smoother operations under the simplified tax framework provided by the EU.

Invoice Requirements in France

General invoice information:

Date of invoice issuance;
Date of the supply of goods or provision of services;
A unique sequential number.

Seller information:

Company name;
Full address(head office);
Billing address if different from company address;
VAT number;
Siret or Siren number.

Customer information:

Name;
Full address;
VAT number;
Delivery address;
The billing address if different from the delivery address.

Fiscal Information:

Description and breakdown of the goods or services – quantity, discounts, unit price excl. VAT;
Net amount;
The VAT rate(s) applied and the breakdown of VAT per rate;
Invoice Total.

Additional information required in particular cases:

Exemption reference – guaranteed by precise norm;
Reverse charge – term if applicable;
Self-billing – term if applicable;
Tax Representative information.

Foreign Currency Invoice in France

In France, it’s permissible to issue tax invoices in foreign currencies, but the VAT amount on the invoice must be shown in EUR. If the supplier doesn’t do this, the invoice is invalid.

VAT Return in France

Domestic returns

Domestic taxpayers and non-established foreign businesses who conduct business under the national VAT France rules should submit monthly or quarterly declarations depending on their turnover.

Penalties for late reporting and omitted declarations

Taxpayers should unequivocally charge France VAT on their transactions when the responsibility rises and submit the VAT return. If they do the return fillings after the deadline, they can expect to allocate more funds than they would if they had filled the return within the permitted timeframe.

If the VAT declaration deadline is exceeded, the taxable person could encounter the following penalties:

interest of 0.20% per month of delay if the declaration is not filed on time;
an increase of 10% if the declaration is filed within 30 days of the formal notice or before its issuance;
an increase of 40% if the declaration is filed more than 30 days after formal notice;
an increase of 80% in the event of severe and repeated omissions, errors, or breaches on the company’s part.

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