When do you need to VAT register in France?
Foreign companies which carry out specific commercial activities in France, may be required to submit VAT returns and consequently have to register for VAT purposes in France. These companies should make sure that the French VAT regulations are respected.
There are various situations where a VAT registration is required.
VAT identification is mandatory when the foreign company not established in France carries out transactions for which it is liable for tax (transactions carried out with customers not identified for VAT purposes in France) or for which it must complete reporting formalities in France (intra-Community acquisitions, export supplies, intra-Community supplies, imports followed by an intra-Community supply known as "regime 42").
What kind of VAT registration?
VAT is normally due by the supplier of goods or the service provider (general rule). Where, therefore, a foreign company carries out taxable operations in France for which it is liable for VAT, it must charge French VAT to its client:
- EU companies should register directly with the tax office for foreign companies (art. 286 ter of CGI). They can, however, appoint an agent to act on their behalf, Nevertheless they are still liable for the tax. An occasional VAT proxyholder ("mandataire ponctuel") can also be appointed under conditions.
- Non-EU companies should be registered with a individual VAT representative.The tax representative undertakes to complete the formalities required of the person who as appointed him (making the statement of establishment, book-keeping, signing turnover returns and paying the tax). The tax representative is legally responsible for meeting his obligations and legally liable for the tax owed. The tax representative has the same rights as all other taxable person.
- France however introduced an exemption to the above fiscal representative obligation for the following countries:
South Africa Faroe Islands New-Zealand Aruba India French Polynesia Australia Iceland Republic of korea Azrbaidjan Japan St. Bartholomew Curaçao Mauritius Saint-Martin Géorgia Mexico Sint Marteen Ghana Moldavia Tunisia Greenland Norvway Ukraine
VAT Obligations
When VAT registered, foreign companies have to deal with their VAT obligations, i.e. filing periodical VAT returns, keeping of books and records, VAT accounting, issuance of invoices, payment of VAT, invoices with mandatory information, etc.
VAT Optimizations
- Reverse charge mechanism : The generalized reverse charge mechanism has been introduced in France since 2007 and is applicable to all supplies of goods and services that are deemed to take place in France and performed by a taxable person not established in France (i.e. established in another EU Member state or outside the EU) to a customer identified for VAT purposes in France;
- VAT warehousing arrangements;
- Deferred payment of VAT due upon importation