Archives des VAT - FBA - French Business Advice

VAT news: Two useful information

FBA team — Mon, 09 Jun 2025 12:52:08 +0000

1 – Lowering the exemption (franchise) threshold
2 – Hotel or hotel-type accommodation services

Article of 15/04/2025 updated on 09/06/2025

The 2025 Finance Act established a single national exemption threshold, set at €25,000 for the previous calendar year and €27,500 for the current year, regardless of the activity carried out.

Faced with questions raised by this measure and its implementation on March 1^st 2025, it was decided to suspend this reform until June 1^st 2025.

Finally, the Government decided to suspend implementation of the reform until the end of 2025 in order to propose a new bill that takes into account the realities of competition and simplifies the system.

Below we provide a brief reminder, in the first part, of the current VAT exemption thresholds as well as the terms of exit from the exemption regime.

In the second part, we will set out the conditions that must be met in terms of services provided to customers by a furnished rental company, in order to be subject to VAT under the hotel regime.

1 – The exemption threshold

The VAT exemption applies for the current year when the turnover generated in France for the previous year is less than or equal to:

€85,000 for companies engaged in trading activities or providing accommodation services;
€37,500 for companies providing services other than sales for consumption on the premises and accommodation services.

If these thresholds are exceeded, the VAT exemption may continue to apply in the year in which the thresholds are exceeded, provided the “increased” thresholds are not exceeded:

€93,500 for companies engaged in trading activities or providing accommodation services;
€41,250 for companies providing services other than sales for consumption on the premises and accommodation services.

In addition, since January 1^st 2025, the VAT exemption also applies to transactions carried out by the company in one or more Member States of the European Union (EU).

The company will benefit from the applicable exemption regime of the Member States concerned if it meets the following conditions:

not exceed €100,000 in turnover in the EU in the previous year and the current year;
provide the French administration with prior notification indicating the intention to use the VAT exemption in one or more EU Member States;
meet the conditions for application of the VAT exemption regime of the EU State(s) concerned.

Consequences of the exit from the “franchise” regime:

In the event of excess of the increased threshold, the company must submit VAT on transactions carried out from the first day the threshold is exceeded. Invoices issued from this date onward must indicate the amount of VAT charged to customers.

The company is now entitled to deduct VAT on its business purchases.

What should new taxpayers do?

Check with the tax office that their VAT number is active or, failing that, request its activation and create their subscriber area in order to transmit their VAT declarations to the tax authorities (or contact an EDI partner for electronic transmission);
Update the invoicing software to remove any reference to the VAT exemption regime;
Implement processes, a management system, or an ERP system that will enable it to comply with all the VAT issues and obligations resulting from this new status as a VAT payer.

2 – Hotel or hotel-type accomodation services

A large number of no-professional furnished rental companies (LMNP mainly) would like to obtain a VAT refund on their investments but are frightened by the conditions required (particularly the ancillary services to be provided) in order for their services to be subject to hotel VAT.

In fact, in addition to the usual nature of repeatedly providing rental services, the para-hotel activity is characterized by the offer, in addition to accommodation, of at least three of the following four services:

The cleaning of the premises must be carried out regularly. This condition will be considered satisfied when the operator simply has the means to offer such a service to the customer during their stay, at regular intervals. On the other hand, it must be considered not satisfied if the operator only cleans at the beginning and end of the stay or if it provides the customer with cleaning equipment.
However, it is accepted that an operator only carries out cleaning at the beginning and end of the stay provided that it has the means to offer a cleaning service at a regular frequency, provided however that the stay does not exceed 5 nights.
The operator must provide household linen to all tenants during their stay. It is not essential to change it regularly.
The operator must have the necessary resources during the rental period to offer a reception service, even if not personalized, to customers. This reception service may be entrusted to a representative who provides it in a single location separate from the premises themselves (for example, a reception service located at the entrance to the village where the rentals are located). An electronic reception system (key box) with no alternative in the form of a physical reception desk is not enough to meet this requirement.
The operator must have the necessary means to be able to provide breakfast to all tenants either (at the operator’s choice) in the rooms or apartments, or in a converted room located in the building or the real estate complex.

Note: The furnished premises must include all the furniture essential for normal occupancy by the tenant. However, it is no longer required that the operator be registered in the trade and companies register.

Note: Where separate professionals each provide, under their own responsibility, the provision of furnished accommodation on the one hand and all or part of the ancillary services on the other, the provision of furnished accommodation is exempt from VAT.

Do you have any question about these two information?
Don’t hesitate to contact us, all our team is at your disposal.

Why not sign up for our newsletter!

L’article VAT news: Two useful information est apparu en premier sur FBA - French Business Advice.

Finance act for 2025 – Main provisions concerning Companies

FBA team — Mon, 17 Mar 2025 15:21:49 +0000

We offer you below a summary of the main measures of the finance law for 2025 concerning businesses. In a forthcoming article, you can discover the main measures concerning individuals.

Faced with the very large number of secondary provisions for the life of a company, we had to make a selection of articles. We also suggest that you contact us if you wish to obtain details on a measure that does not appear in this document.

I – Determination of tax result and calculation of corporation tax

1 – Furnished rentals subject to the real regime

The law provides for the reintegration of depreciation allowed as a deduction from taxable profit into the basis of the taxable capital gain made on the sale of premises which have been the subject of furnished rental as part of an activity carried out on a non-professional basis.

However, the measure does not apply to depreciation relating to construction, reconstruction, expansion or improvement expenses incurred by the seller and carried out by the lessor since the acquisition of the property, when they have not been deducted from taxable income and do not have the character of deductible rental charges.

Exceptions: The measure does not apply to property or rights relating to such property located in:

A residence intended exclusively for students, people in training or internships, people holding a professionalization or apprenticeship contract, or people over the age of 65;
A residence with services for the elderly or disabled;
A residential facility for people who are not able to live independently.

Effective date: February 15^th 2025.

2 – Depreciations

Extension until December 31th 2027 of the super-depreciation mechanism for “green” vessels.
Extension until December 31^st 2030 of the “super-depreciation” of low-polluting vehicles using electricity or hydrogen:
- The scope of the measure is now limited to new vehicles using exclusively electricity or hydrogen and rates are increased.

The deduction is equal to:

115% for vehicles with a maximum permissible laden weight greater than or equal to 3.5 tonnes and less than or equal to 16 tonnes;
75% for vehicles with a maximum permissible laden weight greater than 16 tonnes;
40% for vehicles with a maximum permissible laden weight greater than or equal to 2.6 tonnes and less than 3.5 tonnes.

3 – Corporation tax

The law introduces, for large companies, a tax on capital reductions following the repurchase of their own shares.
Only companies with a turnover excluding tax, adjusted to a twelve-month period where applicable, of more than €1 billion during the last financial year are subject to this tax.

Introduction of an exceptional contribution on the profits of large companies for the first financial year ending on or after December 31th 2025.
This exceptional contribution is payable by corporation tax payers with a turnover of €1 billion or more for the financial year for which the contribution is due or for the previous financial year.

We do not outline the terms and conditions of the above two measures in this article, but our chartered-accountants are available to provide details of the terms and conditions upon request.

4 – Mergers and divisions of companies

The preferential regime for mergers and demergers is extended to the following transactions:

mergers without an exchange of shares;
partial demergers.

We do not present here the details of the conditions for obtaining the benefit of this preferential regime, but we can provide them to you upon simple request.

5 – Agricultural taxation

Partial exemption of Precautionary Savings Deduction (DEP): These amounts are deducted to cover potential contingencies. They are used during the ten fiscal years following the one in which the deduction was made. These amounts are then reported in the income statement for the fiscal year in which they were used or in the income statement for the following fiscal year.

The law provides for a taxation of only 70% of their amount when they are used during the fiscal year in which one of the following risks occurs:
- The occurrence of an outbreak of animal or plant disease or an environmental incident;
- Loss of crops or harvests due to damage caused by climatic hazards;
- Agricultural disasters meeting the conditions for entitlement to compensation.

This system applies to income tax due for the year 2024 and subsequent years.

Provision for increase in the value of the stock of suckler dairy cows: This new provision may be made for financial years ending on or after January 1^st 2025 and ending December 31^st 2028.

Incentives for the transfer of farms to young farmers:
- The amount of the fixed tax allowance applicable to the capital gain on the sale of company shares in the event of a manager’s retirement is increased to €600,000 when the sale is made to:
  - One or more individuals who can provide proof of receipt of aid for the establishment of young farmers;
  - Or a company or group in which each of the partners or members can provide proof of receipt of such aid.

- Exemption from capital gains based on turnover: The revenue threshold in the event of transfer to young farmers is raised to €450,000. The capital gain will be partially exempt if annual revenue is less than or equal to €550,000.

- The exemption of capital gains made in the event of retirement is extended to staggered transfers in the case of transfers to young farmers.

- The capital gains exemption thresholds, based on the price of the assets sold, are increased in the case of transfers to young farmers.
  The amounts of €500,000 (full exemption) and €1,000,000 (partial exemption) are increased to €700,000 and €1,200,000.

All these incentive measures concern sales made from January 1^st 2025.

II – Tax credits

1 – Agricultural tax credits

The following tax credits are extended:

High Environmental Value (HVE) tax credit: through 2025;
“Farm operator replacement” tax credit: until December 31^st 2027.

2 – Changes to the research tax credit

These changes are as follows:

Elimination of the “young doctor” scheme;
The flat rate applied to personnel expenses for calculating eligible operating costs is reduced to 40% (instead of 43%);
Removal of certain expenses from the tax credit calculation base (mainly the costs of obtaining and maintaining certain patents).

Effective date: February 15^th 2025.

3 – Innovation tax credit

The 30% rate is reduced to 20% and is extended until December 31^st 2027.

4 – Research tax credit in the textile sector

This tax credit is extended until December 31^st 2025.

5 – Tax credit for video game development companies

This credit has been extended until 2031.

III – VAT

1 – Rates of VAT

Elimination of the reduced rate on gas and electricity subscriptions: Subscriptions will therefore be subject to the standard rate (instead of the reduced rate), as will gas and electricity consumption for subscriptions relating to periods beginning on or after August 1^st 2025.

Supply and installation of boilers likely to use fossil fuels: The Finance act stipulates that the standard rate of 20% “applies to energy renovation services including the supply or installation of a boiler likely to use fossil fuels.”

Extension of the reduced rate of 5.5% to solar energy production equipment: The reduced rate applies to the delivery and installation, in homes, of electricity production equipment using solar radiant energy with a power output of 9 kilowatts peak or less.
Effective date: October 1^st 2025.

Simplification of certification for work in residential homes: The service provider will now only need to certify on the quote or invoice that the conditions for benefiting from a reduced rate are met.

2 – Simplified system

This system is replaced by a quarterly reporting system: the declaration must be filed every calendar quarter when the taxpayer’s turnover, plus taxable acquisitions, does not exceed:

€1,000,000 during the previous calendar year;
€1,100,000 during the current year.

If the threshold is exceeded, declarations will be filed monthly.

These measures will come into effect on January 1^st 2027.

IV – Miscellaneous taxes

1 – Single VAT payer (groups of companies)

The law establishes an exemption from payroll tax to neutralize the consequences for employers of joining a single VAT payer.

2 – Value-added tax for businesses

The phase-out of the value-added tax for businesses has been postponed for three years. The rate reduction planned for 2025 to 2027 has been postponed to 2028 to 2030.

An additional contribution to the value added tax for companies is introduced for financial years ending on or after February 15^th 2025. The basis for this contribution is the contribution on the added value of companies due for the year 2025 and its rate is 47.4%.

Taxpayers must pay a single advance payment equal to 100% of the contribution by September 15^th 2025 at the latest.

3 – Housing tax

In “France Ruralities Revitalization” (FRR) zones, municipalities may, by resolution, exempt:

Premises classified as furnished tourist accommodation;
Guest rooms.

To benefit from the exemption, the taxpayer must send to the tax office of the location of the property, before March 1^st of each year, a declaration accompanied by all the elements justifying the allocation of the premises.

4 – Vehicle Taxes

All various vehicle taxes are being increased.

In addition, an annual tax has been created to encourage the purchase of low-emission light vehicles. This tax applies to companies with a fleet of at least 100 vehicles.

Please don’t hesitate to contact us if you need any clarification on any of the points raised in this article, and don’t miss our next article on the main new features of the Finance Act 2025 on individuals.

Why not sign up for our newsletter!

L’article Finance act for 2025 – Main provisions concerning Companies est apparu en premier sur FBA - French Business Advice.

VAT and online booking platforms (Booking.com, etc.)

FBA team — Sun, 30 Jun 2024 14:02:17 +0000

Globalization and the digitalization of the economy have considerably transformed consumption patterns and commercial transactions, particularly in the tourist accommodation sector. Online booking platforms such as Airbnb, Booking.com and Expedia now play a central role. This development raises complex questions, particularly in terms of value added tax (VAT).

European legislation determines the territoriality of VAT on these services. According to the basic principle, it is generally due in the country where the client, in this case the host, is established. However, the application of these rules may vary depending on the tax situation of the host and the location of the parties involved.

This study aims to recall the principles of exemption or taxation from VAT for furnished rental companies and, then, to present the rules for taxation of services provided to a host located in France by a platform whose headquarters is abroad.

I – The principles of VAT taxation of furnished rentals

Furnished rentals, subject to specific VAT rules, may benefit from exemptions or be subject to taxation depending on certain conditions.

1 – VAT exemption

Furnished rentals are generally exempt from VAT without the possibility of an option. This exemption applies in particular to rentals of accommodation for primary, secondary or occasional residential use, provided that the lessor does not offer extra-hotel services. These services are as follows:

breakfast;
regular cleaning of premises;
the supply of household linen;
customer reception.

2 – VAT taxation

Furnished rentals become taxable for VAT when the lessor offers at least three of the four aforementioned para-hotel services. In this case the rental is necessarily subject to VAT.

II – The tax definition of services provided by booking platforms

These services are called “Transparent intermediaries”.

Here is the definition of a transparent intermediary:

In his relations with co-contracting third parties (customers, vacationers, etc.), the intermediary acting in the name and on behalf of others clearly appears as the representative of the principal (for example of the hotel for which he registers reservations).

The same applies to the intermediary who contracts personally with the third party when:

the contract expressly mentions that it acts in the name of the host: this condition is only met if the contract indicates the name or company name, the address as well as the taxable person number of the host in this which concerns intra-community operations for which communication to the client of this information is planned;
in the absence of a written contract, the invoice is established directly by the host. If the invoice is issued by the booking platform, it must show that it is acting on behalf of the host;
in the absence of an invoice (operations carried out with non-taxable persons), the legal circumstances (in particular the examination of the clauses of the contract uniting the platform and the host) make it possible to establish that the client was aware of the fact that the intermediary acted on behalf of others.

In cases where your activity as a rental of furnished accommodation, B and B, hotel or other is in relation with a reservation centre acting under other conditions, the VAT regime could turn out to be different. Contact us if necessary to obtain our opinion!

Transactions carried out by transparent intermediaries acting in the name and on behalf of others are considered as services and are subject to all the corresponding rules.

The territorial regime for these services differs depending on whether they are provided for the benefit of taxable persons or non-taxable persons.

In relations between taxable persons (B to B), the general principle of territoriality of service provision is applied. In this case, the service is taxable in the country of establishment of the customer, that is to say in France when the taxable customer has the seat of his economic activity, a permanent establishment or his domicile in France.

A different regime applies to services provided by a transparent intermediary for the benefit of non-taxable persons. The place of services provided (i.e. of VAT taxation) to a non-taxable person by an intermediary acting in the name and on behalf of another is the place where the main transaction is carried out (i.e. in France when the accommodation is provided there).

III – Rules regarding VAT billing by foreign platforms

1. Applicable VAT rate

The Official Tax Bulletin (BOI-TVA-CHAMP-10-10-40-40) indicates: “The operations carried out by these intermediaries are, for VAT purposes, considered as independent services. These services follow their own regime, particularly in terms of rates, independently of the VAT regime of the supplies or services provided by the company.“

This means that the VAT rate on the reservations platform’s commission is always 20% even if it concerns the rental of hotel rooms taxed at a lower rate or a furnished rental exempt from VAT.

2. Services provided to rental companies subject to VAT

Pursuant to Article 259, 1° of the CGI, the place of services is located in France when the lessee (the hotel host or lessor providing hotel services) has in France the headquarters of its activity, a permanent establishment or, failing that, his habitual residence for which the services are rendered.

The service provider checks the place of taxation based on information provided by the customer such as the VAT identification number.

This means that, when the services are provided by a service provider not established in France, the tax must be self-liquidated by the customer (the host) at the time this service is performed (in practice upon receipt of the statement).

VAT declaration: The tax due is self-liquidated by the host on its turnover declaration (for non-payable taxable customers, it is obligatorily self-liquidated on a CA 3 form).

The amount excluding tax of services provided by a service provider established in another EU Member State or outside the EU must be declared on a specific line of the declaration “Purchases of services made from a taxable person not established in France”.

This VAT paid is deductible under common law conditions, i.e. non-recoverable in the event that the declarant is not subject to VAT.

3. Services provided to VAT-exempt rental companies

In this case, the place of VAT taxation is that of the place of supply of housing (location of the building). The service will therefore be subject to French VAT if the building is located in France.

Thus, the foreign service provider (reservation platform) must identify itself for VAT in France or appoint an agent if it is a company with its headquarters in the EEC, or identify itself for VAT in France and appoint a tax representative if it is a non-EEC company.

Thus, the reservation centre must invoice the applicable VAT on its services to its client.

Whatever your situation, we are here to guide you: don’t hesitate to tell us more!

Why not sign up for our newsletter!

L’article VAT and online booking platforms (Booking.com, etc.) est apparu en premier sur FBA - French Business Advice.

Finance act for 2024 – Main provisions concerning companies

FBA team — Thu, 15 Feb 2024 14:50:04 +0000

We offer you below a summary of the main measures of the finance law for 2024 concerning companies. In the next article, you will be able to discover the main measures concerning individuals.

Faced with the very large number of secondary provisions for the life of a company, we had to make a selection of articles. We also suggest that you contact us if you wish to obtain details on a measure that does not appear in this document.

I – Determination of tax result and calculation of corporation tax

1. Creation of a new category of innovative companies : YOUNG GROWTH COMPANY (JEC)

We remind the already existing regime of the “YOUNG INNOVATIVE COMPANY” (JEI): this status allows SME which incur research and development (R&D) expenses representing at least 15% of their costs to benefit from a certain number of tax and social security exemptions.

The companies concerned must meet the following conditions:

Have less than 8 years of existence at the time of the request;
Be truly new, that is to say not having been created as part of a concentration, a restructuring, an extension of a pre-existing activity or a takeover;
Employ less than 250 people, have a turnover of less than 50 million euros and have a balance sheet total of less than 43 million euros at the time of the request;
Their capital must be held for at least 50% by natural persons, one or more other JEI or associations or foundations recognized as being of public utility of a scientific nature, research and educational establishments, etc.;
Carry out R&D expenses representing at least 15% of expenses.

Tax and social exemptions:

Corporate tax: JEI (or JEC) can benefit from exemptions granted to new companies established in certain regional planning zones or to companies carrying out or creating an activity in an urban free zone. However, these companies no longer benefit from corporate tax exemption in their capacity as JEI for those created from January 1^st 2024.
Territorial economic contribution (CET) and property tax: they can be exempted for 7 years upon deliberation of the local authorities.
Please note: tax aid granted to companies placed under the JEI regime cannot exceed the “de minimis” aid ceiling set by the European Commission.
Employer social contributions: for 8 years maximum, the exemption covers part of the remuneration paid to researchers, technicians, research and development project managers, lawyers responsible for industrial protection and staff responsible for pre-competitive tests.
It is also open to corporate officers covered by the general social security system and participating in the R&D project as their main activity.
The exemption from employer contributions only concerns health insurance, maternity, disability, death, old age and family allowances.

YOUNG GROWTH COMPANIES (JEC): The criteria are the same as those of JEI but they must meet additional conditions to qualify them as companies with high growth potential (the conditions will be provided to you upon your request).
In return for these additional conditions, the required threshold for R&D expenses is lowered to between 5 and 15% of expenses.

2. Regional aids

The finance law provides for a new single zoning intended to gradually replace several existing zonings named France rural revitalization zones (ZFRR and ZFRR+).

Municipalities in metropolitan France whose population is less than 30,000 inhabitants and which are members of a public intermunicipal cooperation establishment whose population density is low are classified as ZFRR.

Municipalities classified in a ZFRR (as defined above) and members of an EPCI with its own tax system facing particular difficulties over a period of at least 10 years are classified as ZFRR+.

We will obviously be able to send you the list of municipalities classified ZFRR or ZFRR+ as soon as it becomes available (in the following months).

Exemption from tax on profits in ZFRR and ZFRR+:

To be eligible, companies must carry out an industrial, commercial, artisanal or professional activity.

To benefit from the ZFRR+ exemption measures, the company whose activity is created must belong to the category of micro, small and medium-sized enterprises.

To benefit from the exemption measures in ZFRR, the company must employ fewer than 11 employees and establish its head office in ZFRR as well as all of its activity and its operating resources.

Determination of the exemption: the exemption is total for 5 years, then partial for 3 years. For profits made during the 1st, 2nd or 3rd period of 12 months following this total exemption period, the profits are respectively taxed for 25%, 50% and 75% of their amount.

Optional and temporary exemption from CFE in ZFRR and ZFRR+:

Municipalities and EPCI with their own tax system may exempt from business property taxes (CFE), establishments (or extensions of establishments) carrying out an industrial, commercial, artisanal or non-commercial professional activity created by companies benefiting from the corporation tax exemption in the ZFRR and ZFRR+ zones.

Exemptions from social contributions:

Those associated with the ZRR are switched to the FRR zones.

Here’s the list of zonings extended:

Priority development zones: extension until December 31^st 2026;
Employment areas to be revitalized: extension until December 31^st 2024;
The Priority Districts of the City policy and the Urban Free Zones – Entrepreneur Territory are extended until December 31^st 2024;
The schemes for regional aid zones (AFR) and investment aid for small and medium-sized businesses until December 31^st 2027.

3. Over-depreciation for “clean vehicles”

Since January 1^st 2024, companies subject to corporate tax or income tax according to a real tax regime can practice a deduction based on the cost, excluding financial costs, of the transformation of vehicles to thermal motors assigned to their activities in vehicles with battery or fuel cell electric motors.

This concerns vehicles whose total authorized weight is greater than or equal to 2.6 tonnes.

The deduction rate is 20 to 60% depending on the total weight of the vehicle.

Similar regimes are planned for boats using “clean energy” as well as for public works equipment or ski lifts in ski resorts.

4. Calculation of corporate tax

Certain tax reduction or credit measures are extended:

Tax reduction for providing a fleet of bicycles: until December 31^st 2027;
Tax credit for production expenses for phonographic works: December 31^st 2027;
Tax credit for video game creators: December 31^st 2026;
Tax credit for executive production expenses for cinematographic and audiovisual works: December 31^st 2026;
Tax credit for live performance production expenses: December 31^st 2027;
Tax credit in favor of theatrical performances of dramatic works (extended to circuses): December 31^st 2027;
Tax credit for musical publishing expenses: December 31^st 2027;
Tax credit in favor of artistic crafts: December 31^st2026.

Creation of a tax credit for investments in favor of green industry:

Industrial and commercial companies taxed according to their actual profit or exempt under certain preferential regimes (new companies, regional aid, etc.) will be able to benefit from the tax credit.

The tax credit concerns new investment expenses incurred for their activities contributing to the production of batteries, solar panels, wind turbines or heat pumps.

The company must meet certain conditions and obtain prior approval from the minister responsible for the budget after assent from the public environmental establishment (ADEME). This public establishment certifies that the activities set out in the application for approval fall within the scope of eligible activities.

Credit tax calculation:

The basis of the tax credit is made up of expenses incurred, within the framework of the investment plan presented for approval, with a view to the production or acquisition of the following tangible assets:

the buildings, installations, equipment, machines and base areas necessary for the operation of the latter equipment, subject to being acquired from a third party who is not linked to the company;
patent rights, licenses, etc.

The tax credit rate is equal to 20%. This rate is increased to 25% or 40% for investments made in certain regional aid areas.

These provisions apply to applications for approval submitted from September 27^th 2023.

5. Capital gains

Transfers of buildings: the law extends until December 31^st 2026 the application of a reduced corporate tax rate (19%) for capital gains from the sale of office buildings, or for industrial or commercial use, and land to build, located in areas where there is a particularly significant imbalance between supply and demand for housing, provided that the transferee transforms the property into residential premises within 4 years.

Compensation paid by an insurance company to an insurance agent ceasing his activity: from now on, insurance agents can benefit from the capital gains exemption regime (total exemption if the price is less than €500,000; partial exemption if the price is between €500,000 and 1 million euros) in the event of transfer of portfolio to the mandating company and receipt of compensation.

6. Dividends received from a subsidiary established in another Member State of the European Union or the EEA

The rate of the share of fees and charges is set at 1% for dividends received by a company member of a group due to a participation in a company subject to a tax equivalent to the corporation tax in a Member State of the European Union or in another EEA State, provided that these companies have fulfilled, for more than one financial year, the conditions to constitute a group than if the second company was established in France.

7. Micro-BIC regime for furnished rentals

The tax regime for direct or indirect rentals of furnished tourist accommodation (within the meaning of article L. 324-1-1 of the tourism code) is aligned with that of the micro land regime for bare rentals, with the application of a 30% reduction within the limit of €15,000 in revenue.

However, rental activities of premises classified as furnished tourist accommodation benefit from an additional reduction of 21% on turnover, when the latter are not located in geographical areas characterized by a significant imbalance between the supply and the demand for housing (mainly rural areas), provided that the annual turnover excluding taxes does not exceed €15,000.

In the absence of a specific effective date, the measure applies for the determination of 2023 income tax.

8. Strengthening control of transfer pricing of multinational companies

This reinforcement results in:

Lowering the turnover threshold for triggering the obligation to present, at the start of tax audit, complete documentation of the transfer pricing policy (€150 million instead of €400 million);
Increase in the amount of the fine for failure to present this documentation;
Opposability of the documentation to the company.

9. Agricultural profits

Increase in the ceilings for the precautionary savings deduction:

All thresholds are raised by approximately 14% for the income tax due for 2024 and subsequent years.

Increase in the application limit of the micro-BA regime:

The ceiling for the average revenue over the last three years, below which farmers can benefit from the “micro-BA” scheme, increases from €91,900 to €120,000.

This new ceiling applies to the income tax due for the year 2024 and subsequent years.

Raising the threshold for exemption from professional capital gains:

The revenue ceiling allowing you to benefit from the total exemption is increased from €250,000 to €350,000 for companies carrying out agricultural activity. In addition, the turnover ceiling allowing for partial exemption is increased from €350,000 to €450,000.

Tax credit for replacement expenses for agricultural operators’ leave:

The “common law” rate of the tax credit is increased to 60% instead of 50%.
This rate is increased to 80% (instead of 60%) for expenses incurred to provide replacement for leave due to illness or an accident at work as well as (new) to follow professional training.
The number of replacement days giving entitlement to the tax credit is increased to 17 days (instead of 14 days).

This system applies to expenses incurred from January 1^st 2024.

“High environmental value” (HVE) tax credit:

The application of this tax credit is extended for 2024.

II – VAT

1. Adaptation of VAT rules to European directive 2022/542

Adaptation of the rules of territoriality of service provision as well as operations relating to works of art and collectibles and antiques:

Changes to the territoriality rules will come into force on January 1^st 2025. We will present them in future articles.

Adjustments to the furnished rental regime:

The law gives a new definition of activities taxable for VAT.

Hotel sector: These are accommodation services provided within the framework of the hotel sector or sectors with a similar function which meet the following cumulative conditions:
- They are offered to the customer for a period not exceeding thirty nights, without prejudice to the renewal possibilities offered;
- They include the provision of furnished premises and at least three of the following services: breakfast, regular cleaning of the premises, the supply of household linen and the reception, even if not personalized, of customers;
Other sectors: Rentals of furnished accommodation for residential use (other than the hotel sector referred to above), which are accompanied by three of the following services: breakfast, regular cleaning of the premises, supply of household linen and reception, even non-personalized, customer-oriented;

Indirect rentals: Rentals of bare, furnished or furnished premises granted to the operator of an accommodation establishment which meets the conditions set out above (excluding those granted to the operator of an establishment mentioned in Article L 633-1 of the Construction and Housing Code).

Arrangement of the basic franchise:

From January 1^st 2025, companies established in a Member State of the European Union (EU) will be able to benefit from the franchise regime, not only in their State of establishment, but also in other Member States, provided that they do not exceed a ceiling of business set at European level at €100,000.

In return, the franchise thresholds in each State will be modified as follows:

Total national turnover:
- Previous calendar year: €85,000
- Current year: €93,500

National turnover relating to the provision of services other than sales for consumption on site and accommodation services:
- Previous calendar year: €37,500
- Current year: €41,250.

2. Riding education

From January 1^st 2024, the reduced VAT rate of 5.5% applies to services provided by equestrian centers for the teaching of horse riding, access to sports infrastructures dedicated to this practical, as well as animations and demonstration activities for the purposes of discovery and familiarization of the equestrian environment.

3. VAT calculation

Deductions from the tax imposed on certain vehicles:

The value added tax relating to deliveries, imports, intra-community acquisitions and provision of services has been fully deductible since January 1^st 2024 with regard to the following vehicles:

All-terrain vehicles assigned exclusively to the operation of ski lifts and ski areas;
Vehicles designed for transporting equines.

Fishing operations exempt but giving right to deduction:

Since January 1^st 2024, exempt operations carried out by fishermen give rise to the right to deduction. This concerns fishermen and fishing boat owners, with the exception of freshwater fishermen.

New application schedule for electronic invoicing:

Reception of electronic invoices, mandatory for all companies from September 1^st 2026;
Issuing electronic invoices:
- As of september 1^s2026 for mid-sized companies, large companies and VAT groups;
- As of september 1^st 2027, for SME and micro-enterprises that are not members of a VAT group.

III – Local taxes

1. Calendar for the removal of the CVAE

The maximum CVAE tax rate is gradually reduced to 0.28% in 2024:

0.19% in 2025;
0.09% in 2026;
the CVAE will be completely abolished in 2027.

The rate of capping the territorial economic contribution (CET) based on added value is also gradually lowered over four years:

1.531% for taxes established for 2024;
1.438% for taxes established for 2025;
1.344% for taxes established for 2026;
1.25% for taxes established for 2027.

The minimum contribution on the added value of companies is eliminated from 2024.

2. Extension of the scope of application of the property tax exemption for social housing

Social rental housing to which personalized housing assistance applies benefits from an exemption from property taxes for a period of 15 years.

They now benefit, under certain conditions, from an exemption for a period of 25 years when the application for approval was submitted between January 1^st 2024 and December 31^st 2026.

IV – Taxation applicable to vehicles

1. Vehicle registration tax

Scale based on carbon dioxide emissions: “CO2 penalty”:

The trigger threshold drops to 118 g of Co2 per km (instead of 123) and the price, in this case, is €50. All prices are increased and the maximum price (above 193 g/km) is set at €60,000 (instead of €50,000 above 225 g/km).

Scale depending on administrative power:

It concerns vehicles which have not undergone European approval. This scale is also increased: for example, 4 CV, €1000 (instead of €500) and €60,000 above 15 CV (instead of €50,000 above 28 CV).

Tax on the mass in running order of passenger vehicles “weight penalty”:

The scale is modified from 2024. The tax threshold is lowered to 1600 kg (instead of 1800 kg). The current rate (€10/kg) is replaced by a progressive scale comprising 5 brackets (with a rate ranging from €10/kg to €30/kg).

Reductions are provided in the following cases:

Vehicles which have at least eight seats and which are owned by a legal entity, the mass in running order is subject to a reduction of 500 kilograms;
Certain hybrid electric vehicles, the mass in running order is subject to a reduction of 200 kilograms, within the limit of 15% of this same mass;
Large families (200 kg per child) for families with at least three children;
Vehicles whose energy source includes electricity (other than exempt vehicles), the mass in running order is subject to a reduction of 100 kilograms.

Tax on the allocation of vehicles for economic purposes (TVS):

The annual tax on seniority is replaced, from January 1^st 2025, by an annual tax on “emissions of atmospheric pollutants”. Three prices consistent with the Crit’Air categories are thus retained:

Category E, which brings together vehicles whose energy source is exclusively electricity, hydrogen or a combination of the two;
Category 1, which brings together vehicles which are powered by a spark-ignition thermal engine and which comply with the Euro 5 or Euro 6 emission limit values;
Category of the most polluting vehicles includes vehicles falling under neither E nor 1.

The annual rate, depending on the category of pollutant emissions, is as follows:

Category E: free
Category 1: €100
Other vehicles: €500.

Hybrid vehicle regime: The exemption for hybrid vehicles is abolished as of January 1^st 2025.

All the team of French Business Advice is at your disposal, so do not hesitate to contact us!

Why not sign up for our newsletter!

L’article Finance act for 2024 – Main provisions concerning companies est apparu en premier sur FBA - French Business Advice.

The taxes on allocation of passenger vehicles

FBA team — Mon, 16 Jan 2023 15:42:30 +0000

These allocation taxes replace the TVS from January 1^st 2022, for an effective declaration in 2023.

These taxes concerning the allocation of vehicles for economic purposes include:

the annual tax on carbon dioxide emissions;
the annual tax on the age of passenger vehicles.

So, we will see below:

who are liable for these taxes;
the tariffs and the method of calculation;
their tax deductibility.

I – Tax payables

1. Liable persons

These are the following people:

vehicle owner;
when the vehicle is the subject of a long-term rental, the lessee (who does not re-lease it to a third party);
the person having the vehicle under any other rental formula (rental or provision);
the company taking charge, totally or partially, of the costs incurred for the acquisition or use of the vehicle.

Individual entrepreneurs fall within the scope of these taxes, however an exemption measure is provided: vehicles used for economic purposes by a natural person are exempt from taxes, subject to compliance with the European “de minimis” framework.

1. Affected vehicles

- - Taxable vehicles

Passenger cars classified as category “M1” within the meaning of European regulations. They are divided into different body types: sedan, car with hatchback, station wagon, coupe, convertible and multipurpose vehicle. In the latter case, these are motor vehicles other than those mentioned above and intended for the transport of passengers and their luggage or their property, in a single compartment.

Note: Passenger cars transformed into commercial vehicles, known as “dérivés VP”, having only one row of seats in the front and intended for the transport of goods should remain outside the scope of the taxes, as in terms of TVS.

Vehicles classified in category N1: these are motor vehicles designed and built primarily for the transport of goods with a maximum mass not exceeding 3.5 tons.

To be subject to taxes, these vehicles must be used in France for economic purposes. Thus, they must be authorized to circulate under one of the following conditions:

they are owned by a company and registered in France;
they travel on roads open to public traffic in the national territory and a company bears, totally or partially, the costs incurred by a natural person for their acquisition or use;
in other cases than above, they travel on roads open to public traffic in the national territory for the purposes of carrying out an economic activity.

- - Exempt vehicles

The exemptions are linked either to the destination of the vehicles or to their source of energy.

The vehicles exempted due to their destination are the following:

wheelchair accessible vehicles;
cars assigned exclusively to rental: this concerns companies whose object is the rental of vehicles. The condition of exclusive allocation is assessed according to the criterion of use of the cars and is strictly applied;
vehicles taken on short-term rentals. They benefit from a tax exemption if the rental period does not exceed one calendar month or 30 consecutive days;
vehicles used by associations: they are exempt from taxes when they are used for the purposes of VAT exempt operations of non-profit organizations whose management is disinterested. The same applies to organizations pursuing objectives of a union, religious or political nature relating to the collective defense of their members;
courtesy cars: these vehicles are exempt when they are exclusively assigned by the taxpayer to the temporary provision of its customers to replace their immobilized vehicle;
cars intended for the transport of people are exempt. This applies to passenger cars or taxis, luxury passenger cars operated under the name of “1st class passenger cars” and cars owned by motor transport companies and travel or tourist agencies and used for transportation of their customers;
cars exclusively assigned to the activity of driving school or competition;
vehicles intended for agricultural and forestry use;
pick-ups exclusively assigned to the operation of ski lifts and ski areas.

The vehicles exempted due to their source of energy are the following:

“clean” vehicles: vehicles whose energy source is exclusively electricity, hydrogen or a combination of the two are exempt from vehicle taxes;
Hybrid vehicles: when they meet certain characteristics, they can benefit from an exemption from the only tax on CO2 emissions (the tax on seniority remaining due).

II – Tax rates and method of calculation

1. Tariffs of the annual tax on CO2 emissions

- - Vehicles under the old registration procedure (NEDC)

The applicable rates are:

either a function of CO2 emissions/km for vehicles which have undergone Community type-approval, the first entry into service of which took place on or after June 1^st 2004 and which were not used for economic purposes before January 1^st 2006;
either a function of the fiscal power of the vehicle for vehicles other than those which apply the tariff according to CO2 emissions.

To know these rates you can consult CIBS art. L. 421-121 et L. 421-122 where you can access by this link, or by contacting us directly.

- - Vehicles subject to the new registration procedure (WLTP)

The rate of the tax is equal to the amount determined according to CO2 emissions, expressed in grams per kilometer (g/km), under the following conditions:

when emissions are less than 21 g/km, the tax rate is zero;
when emissions are greater than or equal to 21 g/km and less than or equal to 269 g/km, the rate is determined by applying a scale presented in CIBS art. L. 421-120 website here (or you can of course also contact us);
when emissions are greater than 269 g/km, the rate is equal to the product between CO2 emissions and €29 per g/km.

1. Tariff on the age of the vehicles

The annual rate depends on the year of first registration and is established according to the type of fuel according to the scale presented to the CIBS art. L. 421-134 whose access link to the website is indicated above.

1. Vehicles whose costs are borne by companies

Concerning vehicles owned by natural persons (employees or managers) and used for economic purposes in the territory of taxation by a company, the amount of the tax is corrected as follows:

application of a weighting coefficient depending on the distance travelled by the vehicle for business trips (CIBS art. L. 421-110).

WEIGHTING COEFFICIENT
Annual distance travelled (km)	Percentage of tax payable
From 0 to 15,000	0%
From 15,001 to 25,000	25%
From 25,001 to 35,000	50%
From 35,001 to 45,000	75%
Over 45,000	100%

application of a €15,000 reduction subject to compliance with the conditions provided, as the case may be, by the general “de minimis” European regulation, the “de minimis” regulation in the agricultural sector or the “de minimis” regulation in the fishing or aquaculture sector.

1. Tax calculation

The tax is determined on the basis of a proportion of annual use, equal to the quotient between the duration of the assignment of the vehicle in France for economic purposes (in days) / the number of days of year.

However, until December 31^st 2024, the taxpayer can opt for a flat-rate calculation of taxes (on CO2 emissions and on seniority) on a quarterly basis. This temporary option is formulated at the latest at the time of the declaration and applies to all vehicles.

1. Reporting obligations

The tax period runs from January 1^st to December 31^st of each year.

How to report taxes depends on the company’s VAT status

for persons liable for VAT subject to the normal real tax regime, the taxes must be declared and paid electronically on the annex to the VAT declaration filed during the month of January (form 3310 A, lines 117 and 118);
for VAT taxpayers subject to the simplified VAT declaration regime, the taxes relating to the year must be declared on form 3517 (CA12-CA12E), which must be filed for the financial year during from which the tax became payable;
for persons not liable for VAT, these taxes are declared and liquidated on the same appendix as persons subject to the normal real VAT regime (form 3310 A) and transmitted electronically to the collection department responsible for the main establishment, during the month of January, according to the VAT deadline calendar.

No declaration is required when the amount of tax due is zero.

Summary annual statement

All companies are required to draw up an annual summary statement of the vehicles they use and which fall within the scope of these taxes. This summary statement must:

show, for each vehicle, the technical parameters involved in setting the tariff, the date of first registration and the date of first entry into circulation in France, the conditions of assignment as well as the periods of assignment. Exempt vehicles are presented separately by reason for exemption;
be made available to the administration and communicated on first request.

To this end, the administration provides taxpayers with models of calculation aid sheets, which can be used as a summary annual statement (forms 2857-FC-SD for the tax on carbon dioxide emissions and 2858- FC for the seniority tax).

III – Tax deductibility of these two taxes

When it is due by a company subject to corporation tax (IS), vehicle allocation taxes are not deductible. On the other hand, when they are due by an entity not liable to corporate tax, these taxes are deductible, in the absence of a provision prohibiting the deduction.

Whether taxes are deductible or not is assessed on the first day of each tax period, i.e. January 1^st of each year.

Consequently, an entity liable to corporate tax on the first day of the tax period cannot deduct them, even if it placed itself, before the expiry of the current tax period, under the regime of the income tax.

Correlatively, a company subject to income tax on the first day of the tax period and which, before the expiry date of this period, becomes a capital company or opts for income tax, may deduct the taxes due from amount of its corporate profit immediately taxable in the name of its partners on the date of the conversion or option.

All the team of French Business Advice is at your disposal to help you to understand better our French system, so do not hesitate to contact us!

Why not sign up for our newsletter!

L’article The taxes on allocation of passenger vehicles est apparu en premier sur FBA - French Business Advice.

Electronic invoicing (e-invoicing)

FBA team — Thu, 15 Dec 2022 10:26:57 +0000

Since January 1^st 2020, all French companies have been required to send their invoices to public bodies in electronic format. All these invoices pass through “Chorus Pro”. However, to date, business-to-business transactions are still not very dematerialized, which generates additional costs for companies.

The amending finance law for 2022 provides for the obligation of electronic invoicing in exchanges between companies subject to VAT and established in France.

This obligation serves several purposes:

to strengthen the competitiveness of companies by reducing administrative burdens, reducing payment times and productivity gains induced by dematerialization. For example, for a company, the cost of an electronic invoice is lower than that of a postage stamp, while that of a paper invoice is more than 10 euros;
to simplify, in the long term, the declarative obligations of companies in terms of VAT thanks to a pre-filling of declarations;
to accelerate fraud detections.

I – Definition of the main terms used

1. Electronic invoice

It is an invoice issued, transmitted and received in a dematerialized form and which necessarily includes a minimum base of data in structured form, which differentiates it from “paper” invoices or ordinary PDF.

It will be sent to the customer through a dematerialization platform, whether it is the public invoicing portal or another dematerialization platform. The use of electronic invoices allows savings for all companies and constitutes a lever for modernizing the invoicing chain.

Invoices transmitted electronically are only valid if the authenticity of their origin (issuer identified), the integrity of their content (not editable) and their readability are guaranteed.

1. E-reporting

E-reporting is the transmission to the administration of certain information (for example, the amount of the operation, the amount of VAT invoiced, etc.) relating to commercial operations that are not affected by electronic invoicing. These are sales and service provision transactions with individuals (or business to consumer transactions “BtoC” such as retail) or transactions with operators established abroad (exports, intra-Community deliveries, etc.). E-reporting makes it possible to reconstruct the overall economic activity of a company complementary to electronic invoicing. Its aim is to allow, in the long term, to offer companies a pre-filling of their VAT declarations.

1. Public portal and dematerialization platforms

Supplier invoices will be sent to companies in electronic form through the chosen platform(s). This platform can be the same as the provider’s, a separate platform, or the public billing portal.

Similarly, when companies issue their invoices to their customers, they will have to use the services of a platform. Any company is free to choose the dematerialization platform(s) of its choice, partner platform and/or public invoicing portal, according to its needs. The platform must be able to offer a readable invoice if the user wishes.

II – The implementation of the electronic invoice

1. Implementation schedule

All transactions carried out between VAT taxable persons established in France must use the electronic invoicing process according to the following schedule:

From July 1^st 2024 for large companies;
From January 1^st 2025 for mid-sized companies;
From January 1^st 2026 for small and medium-sized enterprises as well as for micro-enterprises.

Also affected by this obligation are taxable persons who are not liable for VAT (micro-entrepreneurs and legal persons with VAT exemptions) in order, particularly to control threshold overruns.

Warning: The obligation to receive invoices in electronic format will be mandatory from July 1^st 2024 for all companies, regardless of their size, as soon as their supplier is required to issue in electronic format.

1. The data to be transmitted

The new mandatory information to appear on invoices

These mentions concern the transactions carried out between liable for VAT, they are:

The SIREN number;
The delivery address of the goods, where different from the customer’s address;
Information that the transactions giving rise to an invoice consist exclusively of deliveries of goods or services or consist of both categories of transactions;
The payment of the tax according to the debits, when the service provider has opted for this.

The data to be transmitted to the tax authorities concerning transactions carried out with non-VAT subject persons

Regarding these transactions, the data to be transmitted by the VAT taxable person are:

SIREN number;
The period for which the transmission is made;
Where applicable, the mention “option for the payment of the tax according to the debits”;
The category of transaction: delivery of goods, provision of services or mixed transactions;
The total amount excluding tax and the amount of the corresponding tax;
The total amount of tax due in France (in Euros);
Currency;
The date of the transactions;
The number of daily transactions (for transactions not giving rise to an electronic invoice);
The invoice number (for operations giving rise to electronic invoicing).

The data to be transmitted relating to the payment of service provision operations

Regarding these payments, the data to be transmitted to the tax authorities are:

SIREN number;
The period for which the transmission is made;
The effective collection date;
The amount collected, by VAT tax rate;
The invoice number (for operations giving rise to electronic invoicing).

1. Format of electronic invoices

Operators of partner dematerialization platforms and the public invoicing portal must transmit electronic invoices according to one of the three types of format below:

The Cross Industry Invoice (CII) format;
The Universal Business Language (UBL) format;
The mixed format consisting of a structured data file in XML format and a PDF file.

1. The role of a dematerialization platform

A dematerialization platform is a service provider that will have several roles:

Issuance, transmission, reception of the electronic invoice from the supplier to the customer;
Conversion of the invoice established by the supplier in a format that suits the client;
Extraction and transmission of certain data from the invoice to the tax authorities (for example, identification of the supplier and the customer, amount excluding VAT of the operation, amount of VAT due, VAT rate applied, etc.);
Transmission of transaction data that is not the subject of an electronic invoice to the administration;
Transmission of payment data for all operations.

1. Penalty in the event of non-compliance with electronic invoicing and data transmission obligations

Failure to comply with the billing and transmission of billing data obligations will result in a fine of:

€15 per invoice in the event of non-issuance of an invoice in electronic format, capped at €15,000 per calendar year;
€250 in the event of non-compliance with the e-reporting obligation, capped at €15,000 per calendar year.

All our team is at your disposal to help you with the electronic invoice, don’t hesitate to contact us!

Why not sign up for our newsletter!

L’article Electronic invoicing (e-invoicing) est apparu en premier sur FBA - French Business Advice.

VAT on intra-community acquisitions

FBA team — Fri, 30 Sep 2022 09:04:00 +0000

Intra-community acquisitions are subject to a special VAT regime. As of January 1^st 2022, there has been a change in VAT reporting in this area.

We present below a summary of the rules governing intra-Community acquisitions including:

the definition of intra-Community acquisitions;
taxation;
reporting formalities.

I – Definition of intra-community acquisitions

1. Definition of purchases

An intra-community acquisition is defined as follows by article 256 bis, I.3°al. 1: “obtaining the power to dispose as an owner of tangible movable property sent or transported to France by the seller, by the purchaser or on their behalf, to the purchaser from another State EU member.”

Is also considered as an intra-Community acquisition the receipt by a taxable recipient (who becomes the owner) of goods dispatched or transported under the regime of stocks under a deposit contract within twelve months of the arrival of the goods in France.

2. Definition of allocations assimilated to intra-Community purchases

These are assignments in France by a taxable person for the needs of his business of goods of his business dispatched or transported from another Member State. This system mainly concerns movements of stocks and investment goods.

In certain cases, listed by law, the dispatch and transport of goods from an EU Member State to France carried out by a taxable person, or on his behalf, do not constitute assignments assimilated to intra-community acquisitions of goods (to find out about these cases, you can refer to BOFiP-TVA-CHAMP-10-10-40-20-§ 35-19/01/2022 or contact us).

II – Taxation of intra community acquisitions

1. Taxable acquisitions and exempt acquisitions

Intra-Community acquisitions of tangible movable property are subject to VAT when they are made for consideration by a taxable person or by a non-taxable legal person from a seller who is himself taxable. The seller must also not benefit from the basic small business franchise regime in the state where it is established.

The following are not taxable as intra-community acquisitions:

goods sold by a taxable person who benefits in his Member State from the special basic exemption scheme reserved for small businesses;
goods acquired by non-taxable individuals, with the exception of new means of transport;
goods whose delivery in France is subject to the distance selling regime;
goods which are the subject of installation or assembly in France by the seller or on his behalf. The delivery of these goods is subject to VAT in France;
the introduction into France of natural gas, electricity, heat or cold for the needs of a delivery whose place is located there.

2. The place of taxation

The taxation of intra-Community acquisitions of tangible movable property is made in the state where the goods are at the time of arrival of the shipment or transport to the purchaser.

The purchaser is liable by reverse charge for the tax due in respect of the acquisition. When the purchaser is not established in France, but in the EU or a third country having concluded an agreement for assistance in the recovery of tax debts with France, he must identify himself to the VAT in France, directly or through an agent.

3. The so-called “safety net” rule

An intra-Community acquisition is in principle taxed in the country of arrival of the good. But a so-called “safety net” mechanism allows it to be taxed in France if the purchaser of the property has given the seller his VAT identification number in France when the place of arrival of the property is located in another EU member state.

When the acquisition is subsequently subject to tax in the Member State where the goods shipped or transported arrived, the tax base in France is reduced by the amount of that which was retained in this State.

4. The methods of taxation

Tax base

VAT on intra-Community acquisitions is due spontaneously by the purchaser at the rate and according to the terms applicable in the country of arrival of the goods, on the basis of the price excluding tax invoiced by the seller. If the place of arrival of the goods is located in France, the purchaser must therefore pay the VAT in France according to the methods applicable in our country. If it is not established in France, the purchaser is required to identify himself there and, if necessary, to appoint an agent or a tax representative.

If the price, possibly including subsidies directly linked to the sale price, thus constituting the tax base for French VAT, is invoiced in foreign currencies, it must be converted into euros. The exchange rate to be applied is that of the last rate determined by reference to the rate published by the Banque de France, based on the rate set by the European Central Bank.

Generating event

The chargeable event for VAT occurs when the delivery within the country of similar goods is considered to have been made (BOFiP-TVA-BASE-20-30-§ 10-12/09/2012).

VAT is therefore due upon transfer of ownership of the property acquired, which is analyzed as the transfer of the power to dispose of this property as an owner.

The generating event occurs during the physical handover of the property if the acquisition is made in execution of a hire-purchase contract. If the asset is acquired by leasing, this operation follows the rules laid down for the provision of services.

VAT chargeability

Article 269, 2.d of the CGI enacts “For intra-community acquisitions, VAT is due on the 15^th of the month following that during which the chargeable event occurred“.

However, the VAT is due on the date of the invoice when the invoice is issued before the due date (ie before the 15th of the month following that of delivery).

5. Right of deduction

The right to deduct arises when the deductible tax becomes payable and the transaction is not subject to a particular limitation or exclusion of the right to deduct. But in order to be able to deduct the VAT he has thus paid, the purchaser must mention it on his VAT return and have received from his supplier an invoice drawn up in accordance with Community regulations.

Warning! The right to deduct is called into question when the purchaser of a good, from a defaulting supplier, knew or could not have been unaware that he was participating in a fraud consisting in not paying back to the Public Treasury the invoiced tax.

On the other hand, the right to deduct cannot be exercised for tangible movable property acquired in an EU Member State other than France and intended for customers established in other Member States. As these goods are therefore not physically brought into France, their acquisition does not therefore constitute intra-community acquisitions in France.

III – Declaration formalities

It is in this chapter that the main new features introduced on January 1^st 2022 appear.

1. VAT declarations

For taxpayers subject to the normal real regime, they must mention their taxable intra Community acquisitions on their VAT returns 3310-CA 3.

Form 3310-CA 3 is completed as follows:

Box A line B2 (Intra-Community acquisitions): amount excluding VAT of taxable intra-Community acquisitions;
Box B (statement of VAT payable – gross VAT): calculation of the tax due on lines 08, 09 and 9B according to the applicable rate. The taxpayer must use line 17 of box B, which allows the amount of VAT on intra-Community acquisitions to be isolated.
Box B (statement of VAT to be paid – deductible VAT): depending on the deduction rights of the taxable person, the amount of reverse-charged VAT for intra-Community acquisitions (line 17) is reported as a deduction on lines 19 and 20.

For taxpayers subject to the simplified regime, until December 31^st 2021, the gross tax calculated on intra-Community acquisitions and the related deductible tax were declared on form CA12/CA12 E.

Since January 1^st 2022, these taxpayers must file a monthly CA 3 VAT return (or quarterly if the amount of tax payable is less than €4,000) from the first intra-Community acquisition. The first of these declarations is submitted for the month or quarter in which the first intra-Community acquisition is due and summarizes all the transactions for which the tax has become due since the start of the current financial year.

For companies whose accounting year does not coincide with the calendar year, the reporting obligations differ according to the date of completion of the intra-Community acquisitions:

If these were carried out only between the start date of the financial year and December 31^st 2021, these operations must be declared on line 13 of the CA 12E declaration and individualized in the box reserved for correspondence.
In other cases (acquisitions carried out both in 2021 and 2022 or only in 2022), a CA 3 monthly or quarterly VAT return must be submitted for the month or quarter in which the first intra-Community acquisition carried out in the 2022 period becomes due. As indicated above, this declaration summarizes all the transactions for which the tax has become payable since the beginning of the current financial year.

If intra-Community acquisitions are made from January 1^st 2022, it is necessary, in all cases, to inform the tax department of the companies on which the taxpayer depends of the change in the reporting methods.

2. Other statements

Since January 1^st 2022, companies carrying out intra-Community transactions must file two declarations which replace the Declaration of Exchange of Goods (D.E.B.):

The declaration of customer summary statements for VAT purposes. It should be noted, however, that this VAT summary statement concerns only intra-Community supplies of goods (and therefore not acquisitions).
The declaration of statistical data called EMEBI. This statistical statement concerns only taxable persons appearing in a sample defined by the administration. For the year 2022, taxable persons had to be informed in December 2021.

A letter will be sent each year to the head office of all the legal or natural persons in the sample informing them of their obligation to respond to the statistical survey. The EMEBI must be filed from the 1st and at the latest the 10th working day of the month following the month during which VAT became payable.

All the team of French Business Advice is at your disposal to help you, so do not hesitate to contact us!

Why not sign up for our newsletter!

L’article VAT on intra-community acquisitions est apparu en premier sur FBA - French Business Advice.

Recap of self-liquidation of VAT on imports from January 1st 2022

FBA team — Tue, 15 Feb 2022 15:36:50 +0000

Since January 1^st 2022, the collection of import VAT in France has been transferred from the customs service to the Direction Générale des Finances Publiques (General Directorate of Public Finances). The self-liquidation mechanism on the VAT return becomes automatic and mandatory for any taxpayer identified for VAT in France without any prior authorization.

We present here the main consequences of this change for companies (mainly for very small companies). It should however be noted that details, which may bring about changes in certain specific cases, will in principle be published soon by the administration.

I. The new import VAT self-liquidation mechanism

1. Definition of self-liquidation

The import VAT reverse charge allows an importer to no longer pay VAT to customs during customs clearance, but to indicate it on their CA3 turnover declaration. This indication is made precisely on line 2B of the CA3 declaration form. When the imported good is subject to recoverable VAT, its amount is deducted at the same time on the same declaration.

This process has the advantage of no longer requiring a cash advance from importing businesses which previously had to first pay VAT to the customs services and then deduct it on their next CA3 declaration or request a refund.

But we will also see that a disadvantage may appear among very small companies that occasionally import.

1. The steps and the procedure

From January 1^st 2022, identification of the taxpayer on the customs declaration becomes mandatory.

As soon as a customer is required to have a French intra-community VAT number, he must communicate this number to the person who draws up his customs declarations on his behalf and who is responsible for the accuracy of the information given on the customs declaration.

From the 14th of each month following the import, the online declaration will be pre-filled with the amount of import VAT to be collected from the elements previously declared to the Direction Générale des Douanes (General Directorate of Customs). The pre-filled amounts must be checked by the declarer and will be corrected by him if necessary.

A service on the www.douane.gouv.fr website will provide, if necessary, details of the pre-filled amount.

The deadline for filing the VAT return is set at the 24th of each month for all persons liable for import VAT.

The business tax department becomes the single point of contact for import VAT as well as intra-community VAT and current VAT.

The registers or stock accounts will now be made available to the administration and no longer transmitted to it on an ad hoc basis.

The declaration and payment of VAT due when leaving the RFS will be made directly on the VAT declaration and no longer on customs declarations, which will lead to the abolition of “DAU” in 2022.

1. The particularities of the procedure for foreign companies

When a foreign company (established in another Member State of the European Union than France or in a State outside the European Union) carries out an import, it must communicate to the DGDDI its valid French intra-community VAT number during the customs clearance of the imported goods.

Consequently, if it does not have a valid VAT number in France, it must contact the competent department of the DGFiP as soon as possible to carry out the necessary identification procedures.

Companies established in a third country with which France has a mutual assistance and cooperation instrument administrative must be identified for VAT in France. Consequently, even if they are exempted from appointing a tax representative, they must provide the DGDDI with a valid French intra-community VAT number in support of the customs declaration.

For third-party companies that have appointed a tax representative in France, it is the French intra-community VAT number of the third-party company under which the representative acts that should be provided. It is therefore not the specific number of the representative.

1. Additional note

The absence of any identification is blocking and the customs declaration cannot be validated. Thus, the identified taxpayer must imperatively communicate his French intra-community VAT number to the person who establishes for his accounts for its customs declarations.

II. The consequences of the self-liquidation mechanism in certain specific cases

1. Taxpayers placed under the simplified VAT regime (annual VAT form)

Contrary to the previous system from which only taxable persons subject to the normal real regime could benefit, the reverse charge is now generalized to all taxpayers (taxable or non-taxable persons). Consequently, companies subject to the simplified tax regime (RSI) are required to opt for the normal real regime (RN) when they import into France.

Concerning these taxpayers, they must now file a VAT declaration according to the normal real regime when they import and can therefore no longer benefit from the RSI. Thus, they will have to notify their tax department of their intention to import and thus be placed under a normal real tax regime.

The change of regime occurs during the first import, it is maintained for one year. After one year, a company that no longer uses imports can ask its tax department to return to its old regime.

Companies subject to the simplified agricultural regime (RSA) must self-liquidate the import VAT. They must therefore enter their valid French intra-community VAT number on their customs declaration.

1. Taxpayers placed under the VAT franchise regime

Companies subject to this regime continue to charge without VAT but must punctually declare and pay import VAT in support of a monthly or quarterly VAT declaration. Thus, they must declare the VAT relating to imports on VAT declaration n° 3310-CA3 for the month in which the import VAT became payable.

Taxpayers who do not have an intra-community VAT number will have to obtain one from the tax services and fill it in on all their customs declarations.

1. Charitable or philanthropic organizations

These organizations are subject to the exemption regime, they must self-liquidate the import VAT as liable taxable persons. If necessary, these organizations must take prior steps with their business tax department (SIE) to ensure that they have a French intra-community VAT number before any importation.

If you need clarification on this topic, or our expertise on your specific situation, please contact us!

Why not sign up for our newsletter!

L’article Recap of self-liquidation of VAT on imports from January 1st 2022 est apparu en premier sur FBA - French Business Advice.

The application of the VAT reform on e-commerce

FBA team — Thu, 15 Jul 2021 09:25:44 +0000

The reform of the VAT on distance selling has become necessary because of the exponential growth in the number of online “B to C” transactions which has revolutionized the distance selling market in just a few years.

We have already explained the mechanism of this tax reform in an article entitled “VAT THE REFORM OF DISTANCE SELLING”, we will below present the concrete rules of application of this reform in force since July 1^st 2021.

I – A few reminders on the territorial rules of VAT on e-commerce

1. New intra-community distance selling regime

Transactions concerned: all sales of goods to a private purchaser or (if professional) a “P.B.R.D.”, with the following exceptions:
- deliveries of new means of transport,
- the goods delivered after assembly or installation,
- the deliveries of second-hand goods.
Distance sales tax place: taxation in the country of consumption above an overall turnover threshold of € 10,000.
Distance selling declaration procedures:
- Declaration of transactions in each Member State of consumption,
  Or
- Option exercised for the one-stop-shop -OSS.

Transactions to be declared in the OSS:
- All intra-community distance sales,
- Services provided by community service providers to non-taxable persons, these services being taxable in a Member State in which they are not established.

1. Distance selling system for goods imported from third countries

Definition:
- Deliveries of goods,
- Shipped or transported by the supplier or on his behalf, including when the supplier intervenes indirectly in the transport or shipment of goods,
- From a third country or a third country to the EU,
- To a non-taxable or assimilated purchaser in an EU Member State.
  Excluded are deliveries of new means of transport and assembled installed goods.
Mechanism of the IOSS (Import One Stop Shop): this regime was introduced to facilitate the declaration and payment of VAT on these transactions. The use of this one-stop shop is optional.

Deliveries of goods falling under the IOSS regime:
- Goods shipped or transported from a territory or third country to the European Union,
- Whose intrinsic value does not exceed 150 euros,
- Transported or dispatched by the supplier or on his behalf,
- And which are not subject to harmonized excise duties (alcohol, tobacco, etc.).

II – The operation of one-stop-shops

1. The principles of the one-stop-shop

The one-stop-shop allows operators who are liable for VAT in several Member States to collect these different VATs in a centralized tool, via a single registration. This option is global: when a taxable person opts for one of the one-stop shops, all the transactions concerned by this window must be declared there.

Warning! One-stop shop does not allow deductible VAT that may be incurred locally to be charged. This VAT will therefore have to be the subject of an individual reimbursement request per member state.

1. One-stop shop for services provided by third-party providers

This one-stop-shop concerns the provision of services provided by providers not established in the EU to non-taxable customers. It can be used for all the services performed.

In summary, this service concerns all B to C services to contractors located in the EU provided by taxable persons established outside the EU.

1. One-stop-shop for intra-community transactions

It concerns:

All service providers established in the EU, but not in the Member State of consumption, providing services to non-taxable persons,
Operators carrying out intra-community distance sales of goods,
Deliveries of goods made in a Member State by electronic interfaces facilitating these deliveries.

Note that this one-stop-shop does not allow deductible VAT to be charged but exempts the operator from issuing an invoice.

1. One stop shop for distance sales of imported goods

It concerns imported goods which are the subject of a distance sale when the intrinsic value of the consignments does not exceed 150 €.

The operators interested in this one-stop shop are:

Taxable persons established in the territory of the EU making distance sales of goods imported from territories or third countries,
Taxable persons established or not in the territory of the EU making distance sales of goods imported from territories or third countries and being represented by an intermediary established in the territory of the EU. A taxable person cannot appoint more than one intermediary at the same time,
Taxable persons established in the territory of a third country with which the EU has concluded a mutual assistance agreement and which carries out distance sales of goods imported from that third country.

Practical operation of the one-stop-shop

Registration: taxpayers must subscribe to this service by logging into their professional space, then activating the counter using a code received by post.
We can of course assist you in carrying out this operation.

Declaration: in the systems for the provision of services and intra-community distance sales of goods, the declaration must be made quarterly, before the last day of the month following the quarter.
Regarding the one-stop-shop for imports, the declaration must be registered monthly, at the latest on the last day of the following month.

Payment: it must take place no later than the last day of the month following the period covered by the declaration.

III – Declarations of exchange of goods (D.E.B.)

A circular of May 26^th 2021 from the General Directorate of Customs and Indirect Rights (DGDDI), modifies the reporting obligations of operators carrying out intra-community distance sales of goods from July 1^st 2021.

1. Intracommunity distance sales from France

For companies established only in France which carry out intra-community distance sales for a total amount not exceeding € 10,000, the place of taxation is the Member State of departure of the goods and no DEB on dispatch is required.

In other cases, the fate of the taxable person is settled as follows with regard to the DEB at shipment.

VAT due in the country of consumption and use of the one-stop-shop: taxable persons having opted for the use of the one-stop-shop EU are exempted from subscribing to a DEB for shipment to France for intra-community distance sales that they carry out from France when they are not established in the EU or when they are established in several EU member states.
On the other hand, a company established only in France remains required, if the threshold of € 460,000 is exceeded, to declare in a DEB on dispatch the intra-Community distance sales that it carries out, even if it has opted for the OSS-EU.

VAT due in the country of consumption without using the one-stop-shop: in principle, a DEB on shipment is required when the threshold of € 460,000 per year is exceeded for shipments of goods made from France.

1. Intracommunity distance sales to France

VAT due in France and use of the one-stop-shop: when they have opted for the OSS-UE, the DEB is exempted upon introduction in France:
- Businesses not established in the EU;
- Companies established in a single Member State other than France;
- Companies established in several EU member states.
VAT due in France without using the one-stop-shop: a DEB upon introduction in France remains required in this case as soon as the annual threshold of € 460,000 is exceeded.

If you have any question, you can of course contact us!

Why not sign up for our newsletter!

L’article The application of the VAT reform on e-commerce est apparu en premier sur FBA - French Business Advice.

VAT on margin

FBA team — Thu, 15 Oct 2020 10:06:00 +0000

The VAT on the margin generally concerns resellers who cannot recover this tax on the purchase price of the resold good (example: second-hand goods). It consists, for the company, of collecting VAT only on the margin it makes on its buy-resale transaction. The rate to apply is the same as that for sales of similar goods in new condition.

I – Scope

Transactions automatically submitted

Second-hand goods

To be automatically subject to the margin regime, the operation must meet the following specificities:

The sale is made by a person having the status of taxable reseller;
The property is acquired from a non-liable person such as an individual or an exempt professional, or from a person who is not authorized to charge VAT.

Taxable resellers are professionals who buy or allocate to the company’s stocks or import goods for resale. The goods concerned must be second-hand goods, works of art or antiques or collectibles. In addition, these resellers must carry out the transaction as part of an economic activity.

These are most often garage owners who sell vehicles, second-hand dealers, antique dealers, auctioneers or art galleries.

Real estate dealers

The VAT on margin of real estate dealers does not always apply.

Two situations should be distinguished:

When a property dealer can opt for VAT on margin when buying real estate that is more than five years old, does some minor renovation, and then resells it;
On the other hand, if it carries out heavy renovation work, then resells it, the resale is then subject to VAT on the total price.

For operations involving residential premises (in the case of light renovation only), it is always preferable not to opt for VAT as the VAT would have to be paid to the Treasury and the buyer could not recover it. This will therefore increase the cost price.

When the building bought and resold within 5 years, the sale is still subject to VAT on the total price.

Travel agents

The margin VAT regime applies to transactions carried out by travel agencies acting as an intermediary between the supplier and the traveler, regardless of the quality of the buyer of the trip, whether an individual or a company. This regime is therefore not applicable to direct operators such as hoteliers and transporters.

Travel agencies are subject to VAT on the margin in the country where they are established. Travel agencies whose headquarters of their economic activity are located outside the European Union are therefore not concerned.

The service is exempt from VAT when the trip is made outside the European Union. The margin of the travel agency, although established in the EU, is in this case exempt from VAT.

Building lands

Sales of building land for which the option to VAT has been exercised which are made by taxable persons are subject to VAT on the total price of the transfer in application of the provisions of Article 266 of the CGI.

However, the VAT regime on the margin applies when the properties sold do not have the right to deduct VAT when they are acquired. This is particularly the case in practice when the professional taxable person real estate the building land with an individual.

Transactions never subject to VAT on margin

The VAT regime on margin excludes the following transactions:

When the goods have been collected free of charge;
The goods have been acquired from a taxable person who invoiced VAT;
The goods have been imported;
The goods were the subject of an intra-community acquisition.

II – Rules for calculation and operation of VAT on margin

Calculation

It is a question here of calculating the VAT only on the realized margin.

Let’s take the example of a good bought € 500 and sold € 1,000 excluding VAT, the applicable VAT rate being 20%, VAT will be € 100 (1000 – 500 x 20%) and price VAT included € 1,100.

Now let’s take the same example and do the calculation in reverse (starting from the sale price including VAT): for a sale of € 1,100 knowing that the purchase price is € 500.

€ 1,100 sale price – € 500 purchase price = € 600 margin VAT included
€ 600 / 1.2: € 500 margin without VAT
€ 500 X 20% = € 100 Vat on margin

In the case of a real estate dealer, the purchase price used for the calculation of the VAT base (therefore the margin) includes the costs of the act of purchase of the property. On the other hand, no costs can be added to the purchase price of movable property to calculate the margin used as the basis for VAT.

Operation of VAT on margin

The margin is in principle calculated after each transaction, this method is called the “PIECEMEAL MARGIN”.

In the absence of documents justifying the purchase price, VAT must be applied to the entire sale price. However, for works of art, it is possible to retain a fixed margin of 30%.

In the event of the acquisition of a heterogeneous batch of parts, the trader can set the margin at 50% of the sale price.

Transactions carried out at a loss do not entail any payment of VAT, but this deficit cannot be offset with a profit made on another transaction. Also, to avoid this, the trader can opt for the calculation of the overall margin.

This method consists of calculating the OVERALL MARGIN (sales price including VAT – purchase price including VAT) over a period and adjusting it annually according to changes in stocks. If the purchases exceed the sales, the surplus is carried over to the next declaration.

III – Accounting and invoicing

The main accounting rules

When a company uses the “piecemeal” margin VAT system, it must keep a cost accounting in order to identify each good (or each category of goods if it uses the global margin method).

In addition, if the company carries out taxable transactions at several different VAT rates, they must organize their accounts to be able to distinguish them.

Preparing invoices

It is compulsory to write the following information on the invoices:
Application of the margin system “article 297 A of the CGI and community directive 2006/112 / EC”.

The issued invoice must not show the amount of VAT, customers cannot deduct this VAT.

Depending on the operation carried out, the invoice must be indicated:

“Special regime – Second-hand goods”,
Or “Special regime – Object of art”,
Or “Special regime – Collectibles or antiques“,
Or “Special regime – Travel agency“.

With regard to real estate dealers, the mention of the adopted VAT regime must appear in the deed of sale of the property.

This article gives a brief overview of the problems that the VAT on margin regime can pose to a company. It can lead you to ask yourself a lot of questions that have not been answered in this text.

We are at your disposal to answer your requests: contact us!

Why not sign up for our newsletter!

L’article VAT on margin est apparu en premier sur FBA - French Business Advice.

Archives des VAT - FBA - French Business Advice

VAT news: Two useful information

1 – Lowering the exemption (franchise) threshold2 – Hotel or hotel-type accommodation services

1 – The exemption threshold

2 – Hotel or hotel-type accomodation services

Finance act for 2025 – Main provisions concerning Companies

I – Determination of tax result and calculation of corporation tax

1 – Furnished rentals subject to the real regime

2 – Depreciations

3 – Corporation tax

4 – Mergers and divisions of companies

5 – Agricultural taxation

II – Tax credits

1 – Agricultural tax credits

2 – Changes to the research tax credit

3 – Innovation tax credit

4 – Research tax credit in the textile sector

5 – Tax credit for video game development companies

III – VAT

1 – Rates of VAT

2 – Simplified system

IV – Miscellaneous taxes

1 – Single VAT payer (groups of companies)

2 – Value-added tax for businesses

3 – Housing tax

4 – Vehicle Taxes

VAT and online booking platforms (Booking.com, etc.)

I – The principles of VAT taxation of furnished rentals

1 – VAT exemption

2 – VAT taxation

II – The tax definition of services provided by booking platforms

III – Rules regarding VAT billing by foreign platforms

1. Applicable VAT rate

2. Services provided to rental companies subject to VAT

3. Services provided to VAT-exempt rental companies

Finance act for 2024 – Main provisions concerning companies

I – Determination of tax result and calculation of corporation tax

1. Creation of a new category of innovative companies : YOUNG GROWTH COMPANY (JEC)

2. Regional aids

3. Over-depreciation for “clean vehicles”

4. Calculation of corporate tax

5. Capital gains

6. Dividends received from a subsidiary established in another Member State of the European Union or the EEA

7. Micro-BIC regime for furnished rentals

8. Strengthening control of transfer pricing of multinational companies

9. Agricultural profits

II – VAT

1. Adaptation of VAT rules to European directive 2022/542

2. Riding education

3. VAT calculation

III – Local taxes

1. Calendar for the removal of the CVAE

2. Extension of the scope of application of the property tax exemption for social housing

IV – Taxation applicable to vehicles

1. Vehicle registration tax

The taxes on allocation of passenger vehicles

I – Tax payables

Liable persons

Affected vehicles

Taxable vehicles

Exempt vehicles

II – Tax rates and method of calculation

Tariffs of the annual tax on CO2 emissions

Vehicles under the old registration procedure (NEDC)

Vehicles subject to the new registration procedure (WLTP)

Tariff on the age of the vehicles

Vehicles whose costs are borne by companies

WEIGHTING COEFFICIENT

Tax calculation

Reporting obligations

How to report taxes depends on the company’s VAT status

Summary annual statement

III – Tax deductibility of these two taxes

Electronic invoicing (e-invoicing)

I – Definition of the main terms used

Electronic invoice

E-reporting

Public portal and dematerialization platforms

II – The implementation of the electronic invoice

Implementation schedule

1 – Lowering the exemption (franchise) threshold
2 – Hotel or hotel-type accommodation services