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

FBA - Collection of import VAT in France

Since January 1st 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 1st 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 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!

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