France invoicing
Summary

Standard VAT rate: 20%
E-Invoicing: only B2G
Real-time reporting: mandatory for B2B and B2G, for B2C in 2023
Digital service tax: expected in 2021

Compliance and rates

VAT number format

All EU member states have a fixed format for their VAT numbers. In France, it includes 11 digits and the prefix FR (i.e. FR 012345678 9 0)

VAT rates

The standard VAT rate in France is 20%, with reduced rates of 10%, 5,5% and 2.1% on certain goods and services.

20% (Standard) – Applies to all taxable supplies, with certain exceptions

10% (Reduced) – Passenger transport, certain shows, games and entertainment, certain services to individuals, medicinal products not reimbursed by social security, accommodation in hotels, furnished apartments or classified campsites, sales of food and drink for immediate or on-site consumption, including canteens (except school canteens), unprocessed agricultural, fishery and poultry products not destined for human consumption or farm production, products for use in organic agriculture, and new middle-income social housing.

4,5% (Reduced) – Water and non-alcoholic beverages, as well as foodstuffs for human consumption, special devices and equipment for disabled persons, renewable energy sources, books, cinema and movie tickets, energy renovations, tickets for sports events.

2,1% (Reduced) – Print and online press publications, as well as and medical drugs reimbursed by social security

VAT payments and returns

Since 01/10/2014, VAT returns e-filing (télédéclaration) is mandatory for all companies for VAT return and VAT refund. For the payment of VAT, e-payment [“télérèglement] is also mandatory for foreign companies as from 01/12/2015.

VAT returns have to be filed monthly unless the yearly amount of VAT due is less than EUR 4,000, in which case returns have to be filed quarterly.

VAT Payment frequency

Monthly – Between 15th and 24th of the month following the reporting period, or in case of non-established businesses by 19th day of the month following the reporting period.

Quarterly – Between 15th and 24th of the month following the reporting period, or in case of non-established businesses by 19th day of the month following the reporting period

VAT Returns frequency

Monthly – Between 15th and 24th of the month following the reporting period, or in case of non-established businesses by 19th day of the month following the reporting period

Quarterly – Between 15th and 24th of the month following the reporting period, or in case of non-established businesses by 19th day of the month following the reporting period

Penalties in case of late filings or misdeclarations

Late filing – 10% of the VAT due or a fixed penalty of €150 if there was no VAT due

Late payment – 5% of the VAT due or a fixed penalty of €150 if there was no VAT due. This penalty should be added to the late filing penalties. These penalties are increased to 40% of the VAT due when the error is found by the tax authorities.

Late registration – Normally, no penalties for late registration. Penalties are charged as part of the regularization of the VAT returns.

Invoice requirements

Invoices must contain at least the following information:

  • date of issuance
  • a unique, sequential number of the invoice (generally, per calendar year)
  • supplier / issuer data (company name, address, VAT number and, in some cases, also the company’s tax code)
  • customer data (address and other data if available)
  • full description of goods and services – quantity and price
  • any discounts, ancillary costs and expected expenses (if applicable)
  • the net, taxable value of the invoice
  • rate and amount of VAT applicable for the category of goods and services provided
  • the invoice total, gross amount

E-Invoicing

France started introducing electronic invoice issuance and clearing via the tax authorities in January 2017. After four years, from 2020, all companies holding a public contract must transmit their invoices in the electronic form to their public sector customers (state, local authorities, public establishments, etc.). 

For this model of electronic invoicing, France launched a special portal (Chorus Portail Pro) which enables companies to receive and send invoices to their public customers (i.e. government). Invoices can be submitted by entering data manually, by uploading PDF or XML, or through EDI or API connection.

Given the above, it’s easy to conclude that electronic invoicing and clearing via the tax authorities is mandatory only for B2G transactions, but considering rumors in the financial and tax industry, it is expected for this model to be replicated for B2B, and potentially B2C transactions from 2023. and 2025.

SAF-T

France introduced the Standard Audit File for Tax (SAF-T) on 1 January 2014.

SAF-T is an electronic schema developed for the efficient exchange of information between the tax authorities and businesses. It was created by the Organization for Economic Cooperation and Development in 2005 as a standard to be used globally to ensure consistency from country-to-country to facilitate exchange of data between tax authorities. The file requirements are expressed using XML, although the EU does not specify the exact file format.

Digital Service Tax (DST)

Over the past months, France has shown keen intentions to introduce Digital Service Tax. French authorities created a framework, but due to some delays, Italy overtook them and became the first country that introduced a Digital Service Tax (DST). 

Digital Service Tax (DST)  will be payable at a rate of 3% on the gross revenues received by the companies in the digital sector, resulting from the provision in France during the calendar year. This sort of tax will be mandatory for all multi-national companies which provide one of the following services on the territory of France: a) Digital content, b) Communication services or c) Payment services.

As described in the draft of DST regulations, this sort of tax will be payable by all taxable persons/businesses that, individually or group-wide have (a) a total worldwide revenue higher than EUR 750 million and (b) revenues obtained from the digital services in France higher than EUR 25 million during the calendar year must pay Digital Service Tax.

Unlike Italy who introduced Digital Service Tax, France is more cautious due to strong opposition from the home-countries of the world’s tech giants, such as United States of America who already announced countermeasures for France in case of adoption of Digital Service Tax. The last news from the financial industry says that adoption of this sort of tax in France is postponed until all parties find a common interest in its adoption.

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