All About Value Added Tax (VAT) in France

The French government charges indirect tax in the form of Value Added Tax (VAT) similar to other European countries. The French VAT regulations are based on the European Union (EU) directives. 

As a participant in the EU, France is responsible for adhering to the guidelines outlined in the VAT Directives. Further, the French VAT framework is primarily governed by the French Tax Code (CGI).

This article explains all about VAT in France, including what it is, VAT rates, exemptions, registration, and FAQs.

What is VAT in France?

Value Added Tax (VAT) is an indirect tax imposed on selling goods and providing services in France. Unlike direct taxes, businesses collect the VAT and subsequently remit the same to the French National Treasury. 

Also, VAT is a significant source of revenue, contributing billions of euros annually and accounting for nearly half of the country's tax income.

VAT Registration in France

Companies making taxable products in France must register for VAT. Further, foreign companies selling goods or providing services in France shall register under VAT. The below table lists the VAT registration thresholds in France:

The tax authority assigns a dedicated VAT number to companies once the registration process is completed. The VAT registration number is a crucial tax identifier and should be included on all invoices, statements, and tax-related documents.

What are the different VAT rates in France?

In France, there are multiple VAT rates ranging from 2.1% to 20%, depending on the type of products or services. The table below lists the types of VAT rates: 

VAT reduced rates in France

The Fench tax authority reduced the standard VAT rate specifically for a few goods and services. They are known as intermediate rate, reduced rate, and special rate.

The table below lists some goods and services for which VAT has been reduced:

VAT exemptions in France

While the standard VAT rate is 20% in France, the list of a few products and services exempted from VAT is below: 

• Export of specific goods
• Import of specific goods
• Medical related services
• Activities related to education
• Non-profit organizations operations
• Specified real estate operations
• Operations notified by the authorities

How to calculate VAT in France?

VAT is calculated based on the net cost of a product or service using these formulas:

• In case the price is exclusive of VAT
  • VAT = Price excluding VAT × Applicable VAT rate
• In case the price is inclusive of VAT
  • VAT = Price including VAT - (Price including VAT / (1 + applicable VAT rate))

Businesses can refer to the General Tax Code to find the relevant VAT rate applicable to the goods or services.

When to charge VAT?

VAT can be charged at different points, including upon payment, delivery, or specific dates, like the 15th of the month. However, in real estate transactions, VAT must be charged when the authenticated deed is signed.

FAQs on France VAT

What is VAT?

Value Added Tax (VAT) is an indirect tax in France that is imposed on most goods and services.

What are the rates of VAT?

The standard VAT rate is  20%. However, the tax authority reduced the VAT rates to 10%, 5.5%, or 2.1% based on the good or service.

Where can I find the VAT number?

The tax authority provides the VAT number to the business when the company is registered. Further, you can find the same in the company’s VAT declarations.

When should I submit the VAT declarations?

The businesses that have collected VAT should submit their VAT declarations online following the fiscal calendar set out by the tax authority. Generally, businesses must make submissions halfway through the month or every quarter.