10. Other Business Taxes in France
10.4. VAT - Taxe sur la Valeur Ajoutée (TVA)
TVA (Taxe sur la Valeur Ajoutée) is an expenditure tax imposed on consumers of goods and services.
Companies act as huge tax collectors for the French Government, not least in the collection of TVA, which generates more revenue than any other tax.
TVA is payable on almost all commercial goods and services, with few exceptions.
The most notable of the exceptions is residential property lettings, although the provision of services on a letting comes within the ambit of VAT.
The main rate of TVA in France is 20%, but there is a reduced rate of 5.5% for food, travel, some domestic personal services and most entertainment events.
A reduced rate of 7% also applicable to repair and improvement works to residential dwellings, but only on the costs of professional labour and materials. It is not available for DIY or for materials only.
So, where you employed a registered company but bought the materials yourselves, the materials would need to be purchased at 20%, whilst the rate on the labour would be 7%.
There is also a rate of 2.1% for medical prescriptions, TV licences, sale of live animals, press publications and certain entertainment events.
In order to quality for exemption from VAT there are basic turnover limits that apply, depending on the nature of your business, as follows (2023):
- Commercial sales and classified furnished accommodation - €91,900.
- Services, unclassified furnished accommodation and professions libérales - €36,800.
- Artists and authors - €47,600.
If you reach these levels of turnover you are obliged to charge TVA, although where these limits are only marginally exceeded by up to a few thousand euros (€39,100 and €101,000 in 2023), TVA need not be imposed for two years, including the year in which the limit was exceeded. This tolerance does not apply in the first year, where rule is also pro-rata.
There are different arrangement for artistic professions, more of which you can read about in our Newsletter article Becoming an Artist or Author in France.
If you decide you wish or need to opt for payment of TVA you simply need to write/send a mail to your local tax office - Service des impôts des entreprises. The quickest way is simply to use your 'messagerie' in your income tax account.
If you have sales of over €10,000 outside of France/In Europe, you need a European VAT number. (numéro de TAV intra-communautaire)
An official sample letter that you can use is available at Demande d'attribution d'un numéro de TVA intracommunautaire.
If you become VAT registered, for suppliers or customers based in Europe you have to complete a DES Declaration Europeenne de Services.
In terms of payment, in the first year payment is made in May for the previous year.
In the second and subsequent years, in July and December, you will be required to make provisional payments based on your previous declaration, although if, based on your previous declaration, the balance due is less than €1,000 none are necessary.
Credits higher than €150 are reimbursed (with delay!); in other cases they are imputed against future payments.
It is possible to go on-line using your Impôts business account to make the declaration. However, our strong advice would be to contact a good VAT accountant, as it is not for the faint-hearted.
The form used for the TVA declaration is for regime reel companies is CA12, and only the brave dare to try and understand and complete it!
If the TVA paid is greater in any period than the TVA received then you may elect to either seek reimbursement or arrange a credit against the next declaration.
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