Case
Your company based in the U.S.A. or in China imports goods in France where they are temporarily stored (importation of goods in France). The goods are sold to various EU companies located all around Europe afterwards.
VAT registration is required and VAT must be paid immediately...
On importation, VAT is payable by any person or persons designated or recognised as liable by the Member State of importation. Your company, acting as the importer of the goods, should normally be VAT registered in France where the custom clearance is done (i.e. where goods are put into free circulation) and pay French import VAT immediately (cash payment: VAT on importation is paid to Customs French Authorities at the border where the goods enter the European Union).
...Unless a deferred VAT payment is applicable
According to article 211 of VAT Directive, Member States may allow that the VAT is paid subsequently in a periodic VAT declaration. This declaration will include both the VAT due and deductible VAT. may provide that, in the case of the importation of goods by taxable persons or certain categories thereof, or by persons liable for payment of VAT or certain categories thereof, the VAT due by reason of the importation need not be paid at the time of importation, on condition that it is entered as such in the VAT return to be submitted.
Postponed accounting on import has been implemented in France. Businesses may currently apply for the postponed accounting of the French import VAT provided the conditions of article 1695 of General Tax Code are met :
- The applicant is VAT registered in France;
- The applicant performed at least 4 importations in France during the last 12 months (it is possible to submit a request for authorization as soon as 4 importations in France have been performed, meaning it is not necessary to wait until the end of the 12 months period);
- The applicant keeps an appropriate administration that allows to monitor the importations in France and check how much VAT he has to pay upon importation;
- The applicant did not commit any violation to the customs or tax regulations during the last 12 months;
- The applicant has a satisfying financial situation during the last 12 months.
"CANA Code 1035" will have to be used in the single administrative document (box 31). The amount of import VAT to be recorded in the French VAT return of the importer will also be indicated.
The condition concerning 4 earlier importations will be repealed as from January 01, 2022, based on Finance Law of 2020 (article 181). It means that as from that date all businesses will be able to benefit from the postponed accounting scheme in France from the first importation.
Pay attention to
Managing the cash flow of your company is a key issue. Despite of the principle of VAT neutrality, cash-flow inconvenience derived from the VAT system is a major concern and is perceived as having a significant financial impact. However, France offer procedures whereby said cash flow inconvenience can be mitigated or avoided. Companies importing goods from a Third Country (i.e. non EU places) into France must pay attention to the following issues:
- Check whether or not import can be VAT exempt (bonded warehouse, VAT warehouse, tax warehouse, importation of goods followed by a subsequent intra-EU supply etc.);
- If no VAT exemption is applicable, proceed with the French VAT registration;
- Check the conditions to apply the deferred payment of import VAT in France.