France VAT guidelines
| FACTSHEET | |
|---|---|
| Country code | FR |
| Tax name | Taxe sur la valeur ajoutée (TVA) |
| Tax Authority | Tax administration |
Overview
France follows VAT system for indirect taxes. It is known as Taxe sur la valeur ajoutée (TVA).
Tax Rates
- Standard rates - 20%
- Pricinpal reduced rates - 10 % 5.5%
- Special Reduced rates & 2.1%
- Taxes applicable might be different in Corsica, Guadeloupe, Martinique and Reunion
Registration Threshold
Goods - €91,900
Professionals involved in the purchase and resale of goods, sales for immediate consumption on-site, and the provision of accommodation (including activities like renting rural lodges, furnished tourist accommodations, and bed and breakfast establishments) when their turnover does not exceed €91,900. To qualify for this VAT exemption, you must meet one of the following criteria:
- Your turnover for the previous calendar year (N-1) should not exceed €91,900.
- Your turnover for the penultimate calendar year (N-2) should not exceed €91,900, and your turnover for the previous calendar year (N-1) should not exceed €101,000.
- For the current calendar year (N), your turnover must not exceed €101,000. If you surpass this threshold, you will be required to remit VAT, commencing from the first day of the month in which the threshold is exceeded.
Services - €36,800
Service providers and furnished rental companies (excluding the rental categories mentioned above) can benefit from a VAT exemption when their turnover does not exceed €36,800. In order to qualify for the VAT exemption, you need to meet one of the following conditions:
- Your sales in the previous calendar year (N-1) should not exceed €36,800.
- Your sales for the penultimate calendar year (N-2) must not surpass €36,800, and the sales for the preceding calendar year (N-1) should not exceed €39,100.
- Your sales for the current calendar year (N) must stay below €39,100. If you surpass this threshold, you will be required to remit VAT starting from the first day of the month in which the threshold is exceeded.
Domestic purchases
VAT not applicable - Article 293b of CGI: CGI : General Tax Code must appear on each invoice By benefiting from the VAT-based exemption system, you cannot deduct it from your purchases (goods or services) made within the framework of your professional activity.
To be able to deduct VAT on your professional purchases, you must opt out of the VAT-based exemption regime .
Intra community
When you make purchases of goods, they are not subject to VAT as long as the total amount of your acquisitions does not exceed €10,000 per year. As soon as this threshold is exceeded, you are subject to payment of VAT.
On the other hand, when you purchase services, you must pay VAT regardless of the amount.
As you are subject to the VAT-based exemption regime, you will not be able to deduct VAT on your purchases . To be able to deduct VAT on your professional purchases, you must opt out of the VAT-based exemption regime.
Exports & Imports
For exports, whether you are under the VAT-based exemption regime or not, you do not charge VAT.
When you carry out imports, whether you are under the VAT-based exemption regime or not, you must pay VAT. On the other hand, with a VAT exemption, you will not be able to deduct the VAT you paid on your imports. To be able to deduct VAT on your professional purchases, you must waive the VAT exemption.
VAT number format
- FR (country code) + 2 digits + SIREN
- Country code + 11 characters. May include alphabetical characters (any except O or I) as first or second or first and second characters.
- Example - 12345678901, X1234567890, 1X123456789, XX123456789
Intra community VAT number
A company that is not liable for VAT is typically not obligated to possess an intra-community VAT number. Nevertheless, this number becomes necessary when the company engages in purchases within the EU that surpass a total of €10,000 annually or when it conducts transactions involving services with EU-based businesses.
Register for Intra community VAT number
For VAT-registered companies, the company's Tax Service (SIE) automatically provides the intra-Community company VAT number during the registration process. This number is required to be displayed on the company's commercial and administrative documents, including invoices and VAT declarations.
On the other hand, companies that are not subject to VAT must request an intra-Community VAT number online through their business account email on the Impat.gouv.fr website if they:
- Engage in transactions involving services with professionals established in the European Union.
- Conduct purchases of goods or services in the European Union that exceed €10,000.
Types of identification numbers issued to a company
| Number | Utility | Shape |
|---|---|---|
| SIREN | Unique identification of your company, its identity card. Must be provided during all steps | 9 digits |
| SIRET | Identification of each establishment of the same company in which the activity is carried out With geographical indication of activity/building. Must appear on pay slips | 14 digits = 9 SIREN digits + 5 institution-specific digits |
| EPA code (or NAF code) | Identification of the industry of your main activity for each establishment.Determine the collective agreement that applies to your employees. Must appear on pay slips | 4 digits + 1 letter |
| RCS (Trade and businesses Register) | Proof of your registration if you are a merchant as IS: IS: Sole traderor as a commercial business | SCR + city of registration + SIREN number |
| LEI ( Legal Entity Identifier or Legal Entity Identifier) | Identification of financial businesses | 20-character string of letters and numbers |
| Intra-Community VAT | Tax registration if you pay VAT. Must appear on invoices and VAT returns | FR (country code) + 2 digits + SIREN |
VAT validation
It is advisable to verify the VAT number on invoices before conducting any transaction.
In the case of an EU partner whose intra-EU VAT number is deemed "invalid," they should furnish a tax certificate issued by their tax authority. Failure to provide this certificate will result in invoicing under the French VAT system.
Invoice Information
| Items | Description |
|---|---|
| Date of invoice issue | The date on which the invoice is created. |
| Invoice Numbering | Each invoice should bear a unique number in a continuous chronological sequence (e.g., invoice 01, 02, 03). In specific cases, separate numbering series may be employed, such as using a prefix per year (e.g., 2018-XX) or per year and month (e.g., 2018-01-XX). For instance, if your invoice concludes in January with invoice number 25: January: Invoice No. 2018-01-025 February: Invoice No. 2018-02-026 * This number must appear on all pages of the invoice. |
| Date of sale or service provision | Current day of delivery or completion of the service |
| Buyer Identity | Name (or corporate name) Address of the registered office of a company Billing address (if different from the registered office) |
| Identity of the seller or supplier | - The full name of an individual contractor, either before or after specifying "Sole trader" or "IS." - The name of the business. - SCR number (Trade and businesses Register) for a trader. - Siren Number. - Address of the registered office, including the name of the establishment. - In the case of a business, mention of the legal form (e.g., EURL, SARL, SA, SNC, SAS) and the declared share capital. >Attention: If the company is in the process of registration, the invoice must be prepared in the name of the business, with the Siret number assigned to it, and not in the name of the creator. Failure to do so may result in the deduction of VAT being rejected. |
| Purchase Order Number | When it has been previously established by the buyer |
| VAT identification number of the seller and the professional customer, only if the latter is linked to the VAT: VAT: Value added tax(reverse charge) | Except for invoices for a total amount excluding tax: Excl. VAT: Duty-freeless than or equal to €150 |
| Description of the product or service | Nature, brand, product reference Supply: materials supplied and labor |
| Detailed breakdown of each service and product provided | Quantity and price detail (optional if the service has been the subject of a prior, descriptive and detailed quote, accepted by the customer and in conformity with the service performed) |
| List Price | Unit price not included VAT, VAT: Value added taxof products sold or hourly rate excluding VAT of services supplied |
| Possible price increase | Transport or packaging costs, for example |
| VAT rate legally applicable Total corresponding VAT amount | If transactions are subject to different VAT rates, the corresponding rate must be shown on each line |
| Price reduction | Discounts, rebates or rebates earned on the date of sale or service and directly related to this transaction, excluding discounts not provided on the invoice |
| Total sum payable excluding tax (excluding VAT) and all taxes included (including VAT) | |
| Date or time of payment | Date on which settlement is to take place Discount terms in case of early payment In the case of no discount, indicate on the invoice: Prepayment Discount: None |
| Rate of late penalties | Due for non-payment on the settlement date (late penalties are due without a reminder) |
| Mention of the lump sum payment of €40 | For recovery costs, in case of late payment |
| Additional info | |
| Member of an approved association , payment by check and credit card is accepted | If the seller or supplier is a member of a management center or an approved association |
| VAT not applicable, art. 293 B of the CGI | If the seller or supplier benefits from the VAT exemption (eg self-employed), the invoice is tax-free |
| Reverse charge Make it clear that this is a duty-free amount | If work is carried out by a subcontractor of the building on behalf of a contractor subject to VAT, the subcontractor no longer declares VAT and the main company declares it ( reverse charge of VAT ) |
| WEEE Eco-participation | Purchase of electronic products or equipment or furniture. |
| Remuneration for private copying (RCP) | Acquisition of a recording medium |
| Self-billing | If the customer produces the invoice himself instead of the seller or supplier |
| B2B invoice | B2C invoice |
 |  |
Issuance of invoice
An invoice must be generated at the moment when goods are delivered or services are rendered. Nevertheless, there are exceptions where an invoice can be issued at a different time:
- In the case of a VAT-exempt supply of goods, the invoice must be issued no later than the 15th of the month following the month in which the delivery occurred.
- For services for which the customer is responsible for paying the VAT, the invoice should be issued no later than the 15th of the month following the period in which the service was provided.
Authenticity of its invoices
Companies involved in issuing or receiving invoices must have the means to verify the genuineness of their invoices. This can be achieved through one of the following methods:
- Implementing Robust Invoice Controls: This involves establishing adequate procedures to verify the source, integrity of the content, and readability of the invoice. This process is akin to a dependable audit.
- Utilizing a Qualified Electronic Signature: An electronic signature that is based on a qualified certificate is employed. It should be generated using a secure electronic signature creation device. This also extends to electronic signatures that, while not qualified, are officially recognized as such by the relevant administration.
- Employing Electronic Data Interchange (EDI) for Invoicing: EDI, which stands for electronic data interchange, can be used as a method for generating and processing invoices.
Intra community supply of goods
Imports
Before engaging in an intra-Community exchange of goods, it is imperative to secure an intra-Community VAT number from the local tax office (SIE). This number will need to be included on the invoices.
Upon the goods' arrival in France, your company is responsible for paying the French VAT based on the transaction price. The invoices issued by the seller (your supplier) will not include VAT from their country.
Exports
Goods shipped can be exempt from French VAT if the following four conditions are met:
- The delivery is made for a consideration, meaning it must be a sale and not a donation.
- Both you and your customer are subject to VAT, and you must possess a VAT registration number. If your customer is a consumer, the supply cannot be exempt from VAT. You are obliged to invoice it and remit it to France.
- Your customer does not qualify for the derogation (PBRD: Person benefiting from the derogation) that allows for the exemption of intra-Community acquisitions from VAT.
- The goods are dispatched or transported outside France. You must be able to provide evidence of the transportation, for example, through a transport invoice.
To qualify for the exemption, you also need to adhere to these conditions:
- Include your VAT number and your customer's VAT number on the invoice.
- Include the words 'VAT exemption, Article 262b(I) of the General Tax Code' on the invoice.
- Record the transaction on your VAT return under the category "exempt transactions."
Intra community supply of services
Selling to Businesses
The applicable VAT rate will align with the country in which the service purchaser is based.
You are required to issue an invoice for your service exclusive of taxes (HT, hors taxe).
It is the responsibility of your business customer to settle the VAT at the rate applicable in their own country of establishment, and they must report it to their local tax authorities.
Selling to Private Individuals
In this case, the applicable VAT rate is the French VAT rate.
You should invoice your service, inclusive of all taxes, including VAT, at the appropriate VAT rate.
Foreign currency invoice
The amount of VAT to be paid or regularized must be indicated in euro. To convert this amount into euros, the last published exchange rate by the European Central Bank (ECB). This exchange rate must be indicated on the invoice.
VAT returns format
In the context of intra-community sales and purchases, it is necessary to submit INTRASTAT and VIES declarations for goods and services, respectively.
INTRASTAT
INTRASTAT consists of two distinct procedures: a statistical survey and a VAT recapitulative statement.
You are obligated to fulfill this reporting requirement if you fall into any of the following categories:
In the previous calendar year, if your acquisitions amounted to €460,000 or more, or if your acquisitions in the previous calendar year were less than €460,000 but you surpass that threshold during the current year.
If your company engages in intra-Community deliveries, there is no specific threshold; DEB reporting is mandatory from the very first intra-Community delivery, regardless of the transaction amount. It is important to note that the statistical survey response is obligatory even if your company doesn't have a transaction flow. In such cases, you should submit a "month without a statistical response" through the DEB WEB online service.
The VAT recapitulative statement corresponds to the tax-related aspect of the DEB. You are required to retain the data used to complete the VAT Summary Report for a period of 6 years starting from the date of the transaction that generated the VAT Summary Report.
VIES
VIES pertains to the declaration of services within the European context, specifically for sales of services to a business entity. This reporting obligation is applicable without any threshold conditions.
The declaration should encompass the following information:
- Customer Name
- Customer's offset tax number
- Invoiced Amount
This declaration must be submitted on a monthly basis, no later than the 11th business day of the month that follows the transaction, whether it was conducted on paper or online.
Einvoicing
Electronic invoicing, which was initially compulsory for public entities, is progressively expanding its reach to encompass professionals:
- Starting from July 1, 2024, all companies must have the capability to receive invoices in electronic format. Furthermore, large companies will be obligated to transmit their invoices electronically.
- Subsequently, commencing on January 1, 2025, intermediate-sized companies will also be mandated to send their invoices electronically.
- Finally, as of January 1, 2026, small and medium-sized companies, as well as micro-companies, will be required to exclusively use electronic means for invoicing.
Record Keeping
Invoices issued by a company must be filed chronologically in a book of accounts. Issuance dates and invoice numbering must follow each other and be consistent.
Invoice numbers should be assigned using a unique, uninterrupted, and chronological sequence, ensuring that no two invoices share the same number.
The company has the flexibility to select different numbering series, for instance, F2023-01-001, 2023-001, etc. This flexibility may be applicable in the following circumstances:
- When there are multiple billing locations, using one series per site.
- When different customer categories necessitate distinct billing rules, assigning a series for each customer category.
- When invoice outsourcing is employed for certain invoices.
The invoice number is considered an essential detail and must be visible on all pages of the invoice. In cases where an invoice spans multiple pages, each page should be sequentially numbered as n/N (where n is the page's serial number, and N is the total number of pages comprising the invoice).
Invoices must be retained for a period of 10 years.
Accounting Entries:
- Ledger and ledger books, including journal books, ledgers, inventory books, etc., must be preserved for 10 years from the year-end.
- Vouchers, such as purchase orders (PO), shipment or receipt records, customer and supplier invoices, etc., should also be retained for 10 years from the year-end.
- In cases where these documents are received in electronic form, they must be maintained in that format for 6 years from the date of the last transaction.
Tax Documents:
- Income and business tax records should be stored for 6 years.
- Industrial and commercial profits (BIC), non-commercial profits (NTB), and agricultural profits (BA) under the real tax regime should also be retained for 6 years.
- Taxes on businesses for individual companies, limited liability businesses (including agricultural holdings and liberal practice businesses) should be preserved for 6 years.
- Records related to direct local taxes (such as property taxes) should be kept for 6 years.
- Documents pertaining to company property tax (CFE: Companies Formalities Center) and CVAE: Contribution on the added value of companies should be retained for 6 years.
- Turnover taxes, including Value Added Tax (VAT) and similar taxes, as well as taxes on shows and insurance agreements, should be preserved for 6 years
Invoice cancellation
In the case of an error or when a discount needs to be applied after an invoice has been issued, it is not permissible to simply delete the original invoice to maintain the sequential numbering of invoices. Instead, there are two accepted methods for rectifying the situation:
Generate a New Invoice
Create a new invoice, and in the reference section, make mention of the canceled invoice. Clearly indicate that this new invoice supersedes the initial one.
Generate a Credit Note: In situations where a discount is granted after the original invoice has been issued, you should issue a credit note. The credit note should reference the details of the initial invoice, including the invoice number and date, and clearly state the reason for the credit. This effectively adjusts the amount owed or accounts for any discrepancies.