Intra-community acquisitions are subject to a special VAT regime. As of January 1st 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;
- 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 15th 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 1st 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 31st 2021, the gross tax calculated on intra-Community acquisitions and the related deductible tax were declared on form CA12/CA12 E.
Since January 1st 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 31st 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 1st 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 1st 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!
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