Value-added tax (VAT) is a consumption tax levied in more than 170 countries, including France. In France, as well as in other EU (European Union) member countries, businesses collect VAT as value is added at each stage of the supply chain, before the consumer ultimately pays the full tax.
VAT is charged as a percentage of the sales price, and while all businesses must comply with certain EU-wide VAT rules, individual countries like France have some flexibility in setting their tax rates and determining what goods and services the VAT applies to.
This guide explains French VAT rules so that you can understand what your obligations are if you’re doing business with consumers or other companies in France.
How VAT works in France
In France, VAT is called Taxe sur la valeur ajoutée. VAT is applied to most goods and services that are sold in the country.
Both businesses located in France and non-resident companies that sell to French customers may be required to register for VAT under certain circumstances. Companies that are required to register also must make sure they comply with their obligation to charge tax at the correct VAT rates.
French VAT rates
In France, there are multiple rates: a standard rate, several reduced rates, and a 0% rate. There are also some exemptions. Here are the rates that apply:
- 20% standard VAT rate: Applies to all goods and services that are not exempt, zero-rated, or subject to reduced rates.
- 10% reduced VAT rates: Applies to certain hospitality services (such as restaurants and accommodation), some passenger transport, and specific categories defined under French VAT law.
- 5.5% reduced VAT rate: Applies to certain essential goods and services, including some basic food items, some books and other media, some pharmaceuticals, and some transportation fares.
- 2.1% super-reduced VAT rate: Applies to tickets to certain cultural events, periodicals, pharmaceuticals, and newspapers.
- 0% VAT rate: Applies to some intra-community and international transit.
In France, products and services that are exempt from tax include some items used for teaching and some banking, financial, and medical transactions.
Registering for VAT
Companies must register, collect, and remit VAT in France in certain situations. The requirements differ for non-resident and resident businesses.
Resident vs. non-resident businesses
Resident businesses benefit from a VAT exemption if their annual turnover stays below specific thresholds — generally about €85,000 for goods and €37,500 for services. Once the relevant threshold is reached, the business must register for VAT. As of this writing, proposed increases to these thresholds (to approximately €93,500 for goods and €41,250 for services) are scheduled to go into effect in March 2026.
Non-resident businesses supplying taxable goods or services in France usually have to register for French VAT from the first taxable sale.
Additionally, under EU rules, businesses (resident or non-resident) making cross-border sales into the EU to consumers exceeding €10,000 across the EU need to register for VAT in relevant EU member states or opt to use the One-Stop Shop to centralize reporting (more on the One-Stop Shop later).
Who needs to register
Your company may need to register for VAT in France if:
- You are a resident business that meets an applicable threshold.
- You are a non-resident business making any taxable sales in France.
- You are a distance seller who has €10,000 or more in cross-border intra-EU sales.
- You participate in a program like Fulfillment by Amazon to make taxable sales or store stock in France.
How to register
French businesses must register with the Service des Impôts des Entreprises (SIE), which is the local corporate tax office in France.
Non-resident businesses must register through the Service des Impôts des Entreprises Étrangers (SIEE), which is the foreign business tax service.
It can take up to eight weeks for your submission to be processed and for you to be assigned a VAT number.
Working with a tax representative in EU countries
Non-EU businesses are generally required to appoint a fiscal representative in France to register for VAT. The fiscal representative, which must be established in France, is jointly liable for the business’s VAT compliance. However, this requirement does not apply to companies established in countries with mutual VAT assistance agreements with France, such as the UK and Norway.
When to charge tax
If you are a French company or a distant seller that meets the registration thresholds, then you may have to charge VAT when selling into France if your transaction is taxable. However, France has three VAT regimes that apply to businesses of different sizes. Specifically:
- The Basic Exemption Scheme applies to small businesses without much turnover. Businesses are exempt from charging VAT and don’t need to submit VAT returns under this scheme, but they also cannot deduct input VAT.
- The Simplified Real Regime: This simplifies VAT compliance by allowing companies to report VAT based on pre-defined percentages, with the amount determined by their activities, instead of requiring companies to report VAT for each individual transaction. Input VAT is deductible.
- The Normal Real Regime: This applies to most businesses and requires tracking and reporting VAT in detail and paying tax on individual transactions at the required rates. Input VAT is deductible.
The French government publishes updated information each year on which businesses qualify for which regimes based on turnover levels.
When you are required to tax individual transactions at specific VAT rates, you should be aware that France’s rules on what items are subject to tax may differ from the rules in other EU countries. Be sure to check the list of taxable items, zero-rated items, and exempt items.
You’ll also need to understand whether your transaction is one where the VAT obligation is not yours to fulfill, such as when the reverse charge mechanism applies or if you are selling on a marketplace that is a deemed seller.
Reverse charges
In France, suppliers typically are obliged to collect the appropriate VAT due on goods and services. The reverse charge mechanism reverses that in some transactions. .
Under the reverse charge system, when a non-resident business sells qualifying goods or services to a VAT-registered business (a B2B sale) in France, the seller may not be required to charge VAT. Instead, the French buyer calculates the VAT due, reports it on their VAT return, and may deduct the VAT at the same time, subject to normal deduction rules.
This allows the buyer to claim deductions at the same time the VAT is reported, and it sometimes allows non-resident sellers to avoid having to fulfill registration requirements — because the buyer is taking care of complying with VAT obligations.
B2B vs. B2C
There are differences in the process and requirements for VAT compliance, depending on whether you are selling to consumers or selling to businesses.
For example, the reverse charge mechanism may apply for B2B sales, while you may decide to participate in One-Stop Shop or Import One-Stop Shop if you are engaged in B2C (business-to-consumer) sales.
One-Stop Shop and Import One-Stop Shop
To simplify compliance for companies doing business in the EU, the EU introduced the One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) in July 2021. With these two programs, while businesses must still apply the correct VAT rates and rules in each country where they sell, they don’t always need to register and file VAT returns in every EU member state.
Instead, eligible businesses can register in one EU country and submit one VAT return that covers all of their qualifying transactions across the EU. OSS applies primarily to cross-border B2C sales within the EU, while IOSS is used for distance sales of imported goods valued at €150 or less.
Under both systems, VAT is charged at the point of sale based on the customer’s location. The seller reports and pays the VAT through OSS or IOSS, and the tax authorities distribute the funds to the appropriate EU countries.
Marketplace facilitators
In France, as in other EU countries, there are certain situations where you are no longer responsible for VAT obligations if you sell through a third-party marketplace. This can include when you sell items to French customers via sites like eBay or Amazon.
In certain circumstances defined by the EU, when you sell through these marketplaces, the marketplace takes on the responsibility of charging VAT because the marketplace is classified as a deemed seller.
Deemed sellers play a key role in the transaction, like influencing the price of goods or arranging for customer shipments, or taking on responsibility for customer service and support. When they fulfill these roles, in certain scenarios defined under EU law, they are treated as a seller even if they never touch the goods coming from the third party providing them to the end customer.
The marketplace still has a seller’s obligation to comply with VAT rules in this situation, absolving you of the tax collection duties.
VAT deductions
It’s important you keep track of VAT deductions so you can submit deductions on your returns and reduce the tax you pay.
You are allowed to deduct input VAT if the costs are related directly to a transaction that was part of your company’s taxable business activities. You need an invoice that complies with France’s VAT rules to show the amount you paid that is deductible, though.
Statute of limitations
The statute of limitations for VAT in France is three years.
Staying compliant with French VAT regulations
The most obvious and important requirements necessary to comply with French VAT regulations include registering when required and collecting VAT on taxable transactions. However, there are also some additional requirements that your business must be aware of, including the following.
Invoicing requirements
There are certain requirements for VAT-compliant invoices in France. Specifically, invoices must contain:
- The date of the invoice and the date of supply if it is different from the invoiced date.
- A unique, consecutive invoice number.
- The supplier’s VAT number and the buyer’s VAT number.
- The full address of both the supplier and the customer.
- A comprehensive description of goods and services, as well as the quantity of items and the unit price if applicable.
- Any applicable discounts.
- The VAT rate and corresponding VAT amount due for invoiced items.
- The gross amount of the invoice.
Filing VAT returns
You must file VAT returns in France regularly, with the frequency dependent upon your situation:
- Domestic and foreign businesses typically must submit monthly VAT returns.
- Domestic businesses that have an annual VAT liability under €4,000 may be able to submit quarterly returns.
VAT returns must be filed online.
Filing deadlines
Monthly and quarterly VAT filings are due between the 19th and 24th of the month after the period ends. French VAT that is due must be paid when returns are filed.
Recordkeeping requirements
Records related to VAT transactions, payments, and returns must be kept for 10 years.
Risks of noncompliance
France can and does conduct VAT audits, and if you are found to have violated registration rules, VAT collection obligations, filing requirements, or payment obligations, you could owe interest on unpaid taxes as well as additional fines and fees.
The late filing penalty equals 10% of the amount of VAT due plus interest charges of 0.2% monthly. If the return is filed more than 30 days after a reminder letter is filed, the penalty can increase to 40% of the unpaid VAT. If authorities discover that taxable activity previously went unreported, an additional penalty of 80% of the VAT due can be imposed. Late payment penalties also equal 5% of the VAT due, along with 0.2% monthly interest.
You don’t want this financial risk affecting your company, or the reputational damage from non-compliance with VAT to impact future opportunities, so make sure you know and follow France’s VAT rules.
Tips on staying compliant with French VAT regulations
Staying compliant with French VAT regulations is easier if you take advantage of programs and tools meant to help. This could include EU programs like the One-Stop Shop and Import One-Stop Shop, and it can include using software that automates the tax collection process.
Software Solutions
Managing your VAT obligations in France is complicated, and if you do business in multiple countries, you need to manage obligations in those locations as well. This can quickly become too much to handle on your own, but Numeral can help.
Numeral automates the process of VAT compliance so you can spend as little as five minutes a month on it. Numeral takes care of tracking when you must register, completing required registration, collecting the correct amount of VAT, and submitting reports and payments.
And Numeral can manage your obligations not only in France but also throughout the EU and more than 55 other countries across the globe.
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Final thoughts
French VAT rules are complicated, with different tax rates to charge and many variables affecting what your obligations are. Numeral can manage all of that for you to make VAT compliance truly effortless.
To learn more about how we can help with all of your VAT and sales tax needs, contact us today.
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