VAT returns in France: Avoid penalties, learn rules
For all businesses, managing VAT returns in France must be taken seriously and is a critical component of financial health and legal compliance. France is a cornerstone of the European Union. France operates a comprehensive Value Added Tax (VAT) system, known in French as Taxe sur la Valeur Ajoutée (TVA). This article will delve into the annual returns, penalties and deadlines with French VAT declarations.
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Understanding French VAT (TVA)
What is the VAT return in France?
VAT in France is an indirect consumption tax levied on most goods and services. Businesses act as collectors of VAT on behalf of the state. When a business purchases goods or services for its taxable activities, it pays input VAT to its suppliers, however, when it sells goods or services, it charges output VAT to its customers. A VAT return in France is a declaration periodically submitted to the Direction Générale des Finances Publiques – DGFiP, the French tax authorities. It reconciles two amounts.
It is reported, during a specific period with:
⇒ the total VAT collected – output VAT – paid to the tax authorities
⇒ the total VAT paid – input VAT – refund due to the business as a VAT credit
VAT returns in France - deadlines and frequencies
The frequency of filing VAT returns in France is based on a business’s annual turnover and the amount of VAT it collected in the year before.
What date are VAT declarations due?
Monthly filing (Régime Réel Normal)
Who it applies to?
Most businesses, with annual turnover exceeding €818,000 for goods-related activities or €247,000 for service-related activities.
Deadlines
VAT returns in France under the monthly regime (Form CA3) are generally due between the 15th and the 24th of the month following the reporting period.
Quarterly filing (Régime Réel Normal)
Who it applies to?
Businesses whose annual VAT due in the previous calendar year was less than €4,000
Deadlines
The VAT returns in France for a quarter are due between the 15th and 24th of the month following the end of the quarter.
Simplified regime (Régime du Réel Simplifié d'Imposition - RSI) - Phasing Out by 2027
Who it applies to?
Businesses with a lower turnover whose annual VAT liability in the previous year did not exceed €15,000 and turnover thresholds were below the Régime Réel Normal.
Deadlines
Businesses under this regime historically filed an annual VAT return in France (Form CA12) by the second working day after May 1st for the previous calendar year.
They could also make a 2 provisional advance payments during the year: 55% of the previous year’s VAT in July and 40% in December. All of the remaining balance or refund was adjusted with the annual return.
Important!
The simplified regime (Régime du Réel Simplifié d’Imposition – RSI) is phasing out by 2027. Businesses that are under this regime will progressively transition to the Régime Réel Normal (monthly or quarterly filing), with electronic filing becoming mandatory.
Specific reporting requirements for French VAT declarations
When businesses are filing VAT returns in France, they must also apply for:
- Intrastat returns – for businesses which are required in the movement of goods between EU member states. They are typically due by the 10th working day of the month following the reporting period.
- EC Sales List (ESL) – it is mandatory for businesses that are supplying services to VAT-registered customers in other EU member states if the reverse charge applies or making intra-Community supplies of goods. They are typically due by the 10th working day of the month following the reporting period.
All French VAT declarations must be submitted electronically through the taxpayer’s personal account on the Impots.gouv.fr website.
Avoiding penalties in France
Failure to adhere to regulations and mandatory information that comes with filing VAT declarations in France you might have problems with different kinds of penalties.
Late filing penalties in France
- Minor delay – within 30 days
If you file the VAT return late within 30 days from a reminder from the tax authorities, or if no reminder was sent but the delay is established, you will incur a 10% penalty on the VAT due.
- Significant delay – after 30 days
If the VAT return in France was filed more than 30 days after a formal reminder, the penalty increases to 40% of the VAT due.
- Undisclosed activity
If there was unreported and undeclared activity, which was discovered by the French tax authorities, the penalty can by as high as 80% of the VAT due.
- Interest on late payment
In addition to the above percentages, a late payment interest of 0.2% per month (2.4% per year) on the overdue VAT is also applied. This interest accrues from the first day of the month following the due date until the payment is made.
You can book a free consultation with our VAT experts in time that is suitable for you!
Late French payment penalties
Even if the VAT return in France is filed on time, late payment of the VAT due incurs a penalty.
- A 5% surcharge on the amount of VAT not paid on time
- Again, the 0.2% interest per month for each month of delay
Late registration penalties in France
While there isn’t typically an immediate financial penalty for late VAT registration itself if a business voluntarily corrects the situation, the late registration can lead to penalties for all the unfiled VAT returns in France and unpaid VAT that accrued during the period the business should have been registered. This makes proactive registration crucial.
French errors and corrections
It is not uncommon to make mistakes on VAT returns in France. The approach to corrections depends on the nature of the error:
- Minor corrections (under €4,000 additional VAT)
If a minor error results in an underpayment of less than €4,000 of VAT, it can often correct by adjusting the subsequent VAT return, for example, by adding the missing VAT in the next declaration.
- Larger errors or audit-triggered corrections
A corrective VAT return for the relevant period or periods must be filed in France for more serious errors or those found during a tax audit. Depending on the intent (e.g., negligence vs. intentional deception), this will likely result in late payment penalties and interest, and potentially additional penalties.
French VAT declarations - How to claim your money back?
How do I get my VAT refund in France? - For businesses
When businesses have paid more input VAT than they have collected in output VAT during a reporting period, they will have a VAT credit. The process for reclaiming this credit on VAT returns in France is as follows:
1. Carry forward – the most common approach is to carry forward the VAT credit to offset future VAT liabilities. This means the credit will reduce the amount of VAT payable in subsequent periods.
2. Request a refund – businesses can request a direct refund under specific conditions:
- Monthly/Quarterly refunds ⇒ If the VAT credit exceeds €760, businesses can request a refund on their monthly or quarterly VAT returns in France (Form CA3).
- Annual refunds ⇒ If the VAT credit is less than €760 but exceeds €150, an annual refund can be requested with the last return of the fiscal year.
3. Submission – the refund request is made directly on the electronic VAT return (CA3 form) or, for certain non-EU businesses, through specific forms (e.g., Form 3519-SD for 8th Directive claims). Supporting documentation, particularly original invoices for input VAT, must be retained and made available upon request.
4. Processing Time – while the tax authorities aim for efficiency, processing times for VAT refunds can vary. They typically take up to six months but can be extended by an additional three months in complex cases or if further information is required.
How do I get my VAT refund in France? - For tourists/Non-EU residents
Non-EU residents visiting France are eligible for a VAT refund on goods purchased for personal use that they take out of the European Union. This is commonly known as “tax-free shopping.”
- Eligibility:
- You must be a non-EU resident.
- You must be at least 16 years old.
- You must be staying in France/the EU for less than six months.
- The goods purchased must be for personal, non-commercial use.
- Minimum Purchase Amount: To qualify for a refund, the total purchase from a single shop on the same day must exceed €100 (including all taxes).
- The proces involves:
1. Obtain a tax-free form ⇒ At the time of purchase, request a tax-free form from the participating retailer. The form must be completed with your personal details and signed by both you and the retailer.
2. Customs validation before leaving the EU ⇒ Before you depart from the European Union (from France if it’s your last EU country), you must have your tax-free form validated by customs. This is a crucial step.
- PABLO kiosks: French border crossings, ports, and international airports typically use self-service electronic kiosks as part of the PABLO (Programme d’Apurement des Bordereaux de Vente à l’Exportation) system.
- Manual stamp: You must go to a customs office with your purchases (unworn or unused), passport, and the tax-free form in order to obtain a physical stamp if PABLO is not available or if you are experiencing any problems.
- Time limit for validation: The validation must occur before the end of the third month following the purchase.
3. Receive your refund:
- Via a Tax Refund Operator: Most commonly, you will use a tax refund company (e.g., Global Blue, Planet Tax Free). Once your form is validated, you submit it to the operator (often by dropping it in a designated box at the airport). They will process your refund, either as cash at a counter or by crediting your credit card or bank account.
- Directly from the Retailer: Less common, but some retailers offer direct refunds.
Who needs to file VAT returns in France?
Filing VAT declarations in France is mandatory for businesses (both foreign and domestic) that are taxable within France.
Taxable persons and their obligations
In general, any businesses that independently carries out an economic activity must comply with French VAT rules. This includes:
- Domestic businesses
French-resident companies or non-resident companies with a fixed establishment in France must register for VAT and file regular VAT returns in France.
- Non-established businesses
Non-French businesses may be required to register for VAT if they perform certain taxable transactions in France. Examples include:
- Distance selling to French consumers above certain thresholds.
- Supplying goods from a warehouse in France.
- Providing services where the reverse charge mechanism does not apply (i.e., the recipient is not liable for the VAT).
- Holding events, conferences, or exhibitions where admission fees or goods sales occur.
- EU businesses
Enterprises from EU member states might be subject to French VAT depending on the nature of their activities such as intra-Community acquisitions or B2C digital services.
- Non-EU businesses
These businesses often require the help of a fiscal representative who becomes jointly and severally liable for the company’s French VAT obligations. The fiscal representative handles the registration, filing of VAT returns in France, and any communication with the tax authorities.
Understanding these specific activities and their implications under French VAT law is the first step towards compliant VAT declarations in France.
What are the VAT rates in France?
France has:
- Standard Rate (20%) – the most common rate, it is applying to the majority of goods and services.
- Reduced Rate (10%) – it is applying to certain items, such as hotel accommodation, catering services, transport, certain cultural events, and some renovation works.
- Reduced Rate (5.5%) – it is applying to certain items, such as essential goods such as foodstuffs, water supply, books, specific cultural and sports events, and social housing.
- Super Reduced Rate (2.1%) it is applying to certain items, such as certain pharmaceutical products and newspaper sales.
Correctly applying VAT rates is crucial for accurate VAT declarations and impacts the final amount reported on VAT returns in France.
What to remember for businesses in France?
VAT returns in France - Fiscal representation
For non-EU businesses performing taxable transactions in France, the appointment of a fiscal representative is often mandatory. This representative is a locally established entity that acts on behalf of the non-EU company, handling all VAT obligations, including registration, filing VAT returns in France, and managing communications with the French tax authorities.
You can book a free consultation with our VAT experts in time that is suitable for you!
Digital services (One Stop Shop - OSS)
For businesses supplying digital services, telecommunication services, or broadcasting services to consumers in other EU member states, the EU’s One Stop Shop (OSS) VAT return scheme simplifies compliance. Instead of registering and filing VAT returns in France (or other member states) for each country where they have B2C sales, businesses can register in one EU member state (often their home country) and declare all their EU-wide B2C sales via a single OSS return.
Record keeping
Meticulous record keeping is not just good practice; it’s a legal requirement. Businesses must maintain accurate and complete records of all sales invoices issued, purchase invoices received, and all other documents related to VAT for a minimum of six years. These records form the basis of VAT returns in France and are essential in the event of a tax audit. Inadequate or missing records can lead to penalties and make it difficult to prove legitimate claims for input VAT.
What to do to stay compliant?
- Understand your filing regime
- Know your deadlines
- Embrace digital tools
- Seek professional advice
- Proactive error correction
Source: VAT returns in France
You can book a free consultation with our VAT experts in time that is suitable for you!
Zosia is a marketing specialist in Eurofiscalis, a company with a well-established position in the field of cross-border VAT compliance. Simultaneously, Zosia continues her academic development as a master’s student in Finance and Accounting, which enables her to stay up-to-date with evolving tax regulations.
Combining her knowledge of marketing with a deep understanding of finance and taxes, creates precise, substantive, and easily accessible content. Her mission is to educate in understanding the complexities of taxation related to doing business in international markets.
With her commitment, Zosia translates complex tax issues into clear language, providing valuable information that genuinely helps companies in their development and international expansion. She aims for tax information to be not only understandable but, above all, helpful in making business decisions.
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