VAT registration in France is essential for foreign companies to ensure compliance with French tax laws, avoid penalties, and conduct business smoothly within the French market. This blog covers VAT registration for foreign companies in France, including eligibility, process, and compliance.
Why Non-Resident Firms Must Register for VAT in France?
Non-resident firms must register for VAT in France to avoid costly penalties, blocked marketplace sales, and customs holds that can disrupt operations. Without VAT registration in France, businesses risk financial penalties and operational delays that could severely impact their trade.
For non-resident businesses in France, VAT registration is crucial to maintain compliance, access VAT refunds, and ensure smooth cross-border transactions. VAT registration for non-resident businesses in France is essential for legal trade and efficient operations in the French market.
When Does a Foreign Business Need to Register for VAT in France? Key Triggers
Foreign businesses must register for VAT in France under several scenarios, even without a physical presence. The key triggers for VAT registration in France include:
- Exceeding Turnover Thresholds: Businesses must register if their taxable turnover exceeds €85,800 for goods or €34,400 for services.
- Distance Selling: If your total annual sales to consumers in the EU exceed €10,000, you must register for VAT in the customer’s country and apply the local VAT rate.
- Intra-Community Acquisitions: Businesses making intra-community acquisitions exceeding thresholds must register.
- Non-Resident Businesses: Non-resident businesses making taxable supplies in France must register for VAT.
- Fixed Establishment: A foreign business with a fixed establishment in France must register for VAT.
Country-Specific Examples
Below are a few examples that illustrate when foreign businesses must register for VAT in France:
- Germany: A German company storing goods in a French warehouse and selling directly to French customers must register for French VAT.
- United States: A US-based business providing digital services to French consumers must register for French VAT, regardless of sales volume.
Note: For more detailed information on the process, refer to the VAT registration guide provided by the French government to ensure compliance.
Registration Thresholds & Nexus Tests
The “no VAT registration threshold” rule applies specifically to foreign sellers (both EU and non-EU), meaning that they must register for VAT in France immediately after their first taxable sale. The following are a few other details to be noted:
- Distance Selling: If your total annual sales to consumers in the EU exceed €10,000, you must register for VAT in the customer’s country and apply the local VAT rate.
- Digital Services: Nonresident businesses selling digital products to consumers in France are required to charge 20% French VAT on these B2C sales.
- Low-Value Imports: For goods imported into France with a value not exceeding €150, non-EU sellers can opt for the Import One-Stop Shop (IOSS) scheme. This allows VAT to be collected at the point of sale, simplifying customs clearance.
France VAT Number Format Explained
While looking at VAT registration in France, it is important to understand the format of the VAT ID number. Here’s a concise table detailing the French VAT ID format, also known as the TVA Intracommunautaire:
| Aspect | Details |
| Country Code | FR |
| Format | FR + 2 digits (control key) + 9 digits (SIREN number) |
| Example | FR32123456789 |
Sample VAT ID numbers include:
- Standard: FR12345678901
- Branch Trader: FR123456789012
- Government Entity: FRGOV123456
- Health Authority: FRHA123456
Common typos in French VAT ID numbers include missing digits (e.g., FR1234567890 instead of FR12345678901), incorrect prefixes (e.g., using FR instead of FRX for certain branches or government entities), and incorrect branch codes (e.g., FR12345678900 instead of FR123456789012).
Is a Local Tax Agent or Fiscal Representative Required?
Non-resident businesses do not always need to appoint a local tax agent or fiscal representative for VAT registration in France. However, they may choose to do so for ease of compliance. If appointed, the representative may assume joint liability for VAT obligations. Some jurisdictions may require a bank guarantee or bond to secure tax payments, though this varies by country.
Special Schemes & Simplifications
Various special schemes and simplifications are available to ease VAT compliance for certain businesses. These schemes are designed to help businesses manage their VAT obligations more effectively. Key examples include:
- Import-VAT Deferment: Allows businesses to defer VAT payment on imports until VAT returns are filed, improving cash flow.
- Simplified VAT for Digital Services: Digital service providers can use the One-Stop Shop (OSS) for simplified cross-border VAT reporting.
- Small Business VAT Exemption: Small businesses with a turnover below €85,800 for goods or €34,400 for services are exempt from VAT registration.
Step-by-Step: How to Register for VAT in France?
VAT (Value Added Tax) is a tax that businesses must charge on most goods and services they sell. To register for VAT in France, follow these steps:
- Determine VAT registration requirement.
- Fill out the registration Form EE0, available on the impots.gouv.fr website.
- Prepare the following documents:
- Copy of the registration certificate with the trade registry or equivalent in the country of origin
- Copy of the company’s bylaws or articles of association, accompanied by a translation into French
- Copy of the identity document of the company’s manager (only for sole proprietorships)
- Send the completed form and documents to the Service des Impôts des Entreprises Étrangères (SIEE):
- Service des Impôts des Entreprises Étrangères (SIEE)
- 10 rue du Centre
- TSA 20011
- 93465 Noisy-le-Grand Cedex
- France
- Once processed, you’ll receive your French VAT number, which must be used on all invoices and VAT returns.
Required Documents Checklist
When registering for VAT in France, you will need to provide several key documents to complete your application. Below is a checklist of the required documents you should gather before starting the registration process:
- Certificate of Incorporation: Proof of the company’s legal existence.
- Company’s Bylaws: Copy of the company’s bylaws/articles, with a French translation.
- Manager’s ID: Identity document of the company’s manager (for sole proprietorships).
- Trade Registry Registration: Copy of registration certificate from the home country.
- Bank Account Details: SEPA-format bank account information.
- Power of Attorney: If applicable, authorization for a tax agent.
Processing Time & Government Fees
When you register for VAT online France, the typical processing time is around 3 months weeks. French tax authorities will review your application, and once approved, you will receive your VAT registration number.
There is generally no VAT registration fee in France. However, certain VAT schemes may require a security deposit or guarantee, particularly if the authorities deem your business to be high-risk or if you have a poor tax history. Ensure your documentation is accurate to avoid delays in the VAT registration in France process.
Post-Registration Obligations
VAT payments are due on the same day the VAT return is filed. For monthly returns, payments are due by the 15th of the following month. For quarterly returns, payments are due by the 15th of the month following the end of the quarter.
Taxpayers pay the tax voluntarily on a monthly, quarterly, or annual basis. An annual summary return must be filed at the latest on 15 January of the following year so that the amount of tax due can be adjusted. Since 2019, wage tax returns must be filed online. Taxpayers whose annual wage tax bill does not exceed €1,200 or the amount of relief are not required to file a return.
Note: VAT records must be kept for at least 6 years. This includes invoices, receipts, and VAT returns. Businesses using MTD must store records digitally.
Claiming Input-Tax Credits & Refunds as a Non-Resident
Non-resident businesses can claim VAT refunds on business expenses incurred in France. To do so, they must meet certain criteria and follow specific procedures. Here’s the outline of the process:
- Eligibility: Non-EU residents, under 6 months in France, and aged 16 or older, are eligible. EU residents, diplomats, students, and individuals returning to or leaving the EU are ineligible. This includes businesses with non-resident tax registration in France.
- Documentation: You need a passport or ID, signed VAT refund form, original invoices, and bank account details.
- Refund Timelines: Claims must be submitted within six months of the purchase date. Refunds are processed after customs approval.
- Common Rejection Reasons: Missing signatures, failure to show goods to customs, or late submission can lead to rejection.
Penalties for Late Registration or Non-Compliance
If a business fails to comply with VAT registration or submission deadlines, the tax authority imposes various penalties and interest charges. Here’s a concise overview of the consequences of late registration or non-compliance:
- Late Registration Penalty: A penalty based on the VAT due from the time of required registration, increasing with the delay.
- Interest on Late Payments: Interest is charged on any unpaid VAT, calculated daily, which grows the longer the payment is overdue.
- Administrative Fees: Additional fees may be imposed for processing late registration.
- Escalating Penalties: Repeated or intentional non-compliance may lead to higher fines or criminal sanctions.
- Ongoing Obligations: Failure to file VAT returns or make payments after registration could result in further penalties.
Deregistration & VAT Number Changes
When your business no longer needs to be VAT-registered or if there are changes to your VAT number, you must follow the correct steps for deregistration or updating your details. Here are the details to note:
- Reason to Deregister: Stop trading, turnover falls below thresholds (€85,800 for goods, €34,400 for services), or business transfer.
- Deadline: Apply within 30 days of becoming ineligible to avoid penalties.
- You can deregister online using the Guichet Unique portal (Guichet Unique).
- Final VAT Return: Submit a final VAT return and account for your assets.
- Confirmation: French tax authorities will confirm your deregistration.
Conclusion
Understanding VAT registration in France is essential for any foreign business operating here. Whether you need to register due to exceeding the VAT threshold, voluntarily register, or update/cancel your VAT registration, meeting deadlines and adhering to regulations is key to avoiding penalties.
VAT registration can be complex for foreign companies, but Commenda can help. Our experienced team specializes in assisting foreign businesses with VAT registration and compliance with the French guidelines.
Focus on growing your business in France while we handle your VAT obligations. Book a free demo with Commenda today to see how we can help!
FAQs: Foreign Business VAT in France
Q. Do non-resident remote sellers need to register for VAT in France if they only supply digital services?
Yes, non-resident sellers providing digital services may need to register for VAT in Saudi based on local regulations and sales thresholds.
Q. What is the sales threshold that triggers mandatory foreign business VAT registration in France?
For non-EU sellers, there is no threshold. For EU sellers, the OSS threshold across all EU countries is €10,000.
Q. How long does the VAT number application process take for a company with no local branch?
The application process typically takes 3 months, depending on the country and whether a fiscal representative is appointed.
Q. Can I reclaim input tax in France without a resident tax representative?
In some countries, it’s possible to reclaim input tax without a resident tax representative, but many require one for compliance.
Q. Which documents are required to open a non-resident VAT account online?
Documents generally include proof of business registration, director IDs, and information on the goods or services provided, with variations by country.
Q. What penalties apply for late or missed VAT filings by overseas entities?
Penalties include fines, interest on unpaid amounts, and possibly a suspension of registration, with repeated violations leading to audits.
Q. Is there a simplified or low-value import scheme for cross-border e-commerce sellers?
Many countries offer simplified VAT schemes for low-value imports, allowing sellers to charge VAT without full registration, subject to specific thresholds.
Q. How do currency conversions affect VAT payments from foreign bank accounts?
VAT payments from foreign accounts are subject to currency conversion at the applicable exchange rate at the time of payment.
Q. Can multiple marketplaces share one France VAT registration or must each seller register separately?
Each seller operating on a marketplace must have their own VAT registration in France unless the marketplace is deemed the deemed supplier under EU rules and is responsible for VAT collection.
Q. What are the annual costs of appointing a fiscal representative in France and can Commenda handle this role?
Fiscal representative costs vary but usually range from a few hundred to a few thousand Euros annually. Commenda can manage this for you.
Q. How do I cancel or deregister my France VAT number if my turnover drops below the threshold?
To deregister, notify the tax authority and submit a final VAT return. You may also need a clearance certificate.
Q. Does the reverse-charge mechanism remove the need for VAT registration on B2B services?
The reverse-charge mechanism shifts VAT responsibility to the buyer, but registration may still be needed based on local regulations.
