There are some significant changes to French VAT law on the 1st January 2022. The management and collection of import VAT in France will be transferred from French Customs (DGDDI) to the French Tax Authority (DGFiP).
From this date, the declaration and payment of import VAT will be made directly in the French VAT return declaration instead of the time that goods are entered to customs.
The use of the reverse charge for import VAT will be compulsory for all businesses registered for VAT in France (including non-taxable persons who have an intra-community VAT number) and there will be no prior authorisation to use this postponed import VAT procedure required.
This will mean that VAT will no longer be collected by the French Customs agent but will be automatically reverse charged on the French VAT returns. This reverse charge mechanism is certainly very beneficial for businesses as it allows to avoid heavy and costly pre-funding of import VAT.
However, all companies who act as the importers of records in France will have to obtain a valid VAT French number and file VAT declarations to be allowed to import goods into France and benefit from this system.
Companies who are eligible to the Import VAT deferment are:
- French companies – As they already have a French VAT number, they will automatically benefit from the Import VAT deferment
- Companies from French overseas territories and regions (DROM) – If they do not already have a French valid VAT number, they will be automatically assigned one by the French Tax Authorities
- Foreign companies – Whether they are established or not in the EU. They will have the obligation to register for VAT in France
How will it work?
The amount of VAT due on importation (auto-liquidated) will be pre-filled by the tax authorities on the VAT return in France on the 14th of each month. For this reason, it will not be possible to file the VAT return before this date (companies with imports are concerned). This amount must be verified and possibly corrected, and then the VAT return must be filed no later than the 24th of each month (which follows the month of imports).
Should your traders be concerned by the new rules?
They should be concerned if:
- They import goods into France and sell them domestically to French clients
- They import goods into France and sell them to clients who are based in other EU Member States (except regime 42)
They do not have to be concerned if they import goods under the appropriate customs regime through a limited tax representative.
What can traders do if they are not already registered for VAT in France?
- Get in touch as soon as possible with our teams and apply for a French VAT number. For your guidance this process usually takes around 3 months.
- Discuss with a tax representative to see if they can act as “limited tax representative” in France and the applicable tax regime available.
- Discuss with a French tax expert the relevant processes for registering for VAT in France and the relevant procedures for paying/reclaiming VAT in France and the record keeping requirements.