VAT Registration in France - Updated Guide 2021
VAT Registration in FranceUpdated on Tuesday 11th May 2021
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The French taxation system is based on direct taxes applied on the income of individuals and of corporations and other indirect taxes. Some of those indirect taxes are the withholding taxes applied to dividends, interests, real estate properties, social insurance and the value added tax. One of our French lawyers can explain all the details about the VAT registration. They can also help foreigners start a business in France.
What is the VAT rate in France in 2021?
The value added tax or VAT (taxe sur la valeur ajoutée,TVA) is a tax levied on goods and services provided in France and it is also called a consumption tax. The value added tax applies to French companies but is collected from the final consumer that benefits from the good or service purchased from the company because it is included in the final price. The VAT is one of the most important taxes in France, as it is a big contribution to the state budget.
The standard VAT rate increased from 19.6% to 20% at the beginning of 2014 in France and the same rate is available and applicable in 2020. However, reduced rates of 10%, and 5.5% still apply to most food products and other consumption goods. There is also a reduced rate of 2.1% that applies to pharmaceuticals, printed materials and other products and services.
VAT exemptions in France
The list of products exempt from VAT in France is quite extensive and among these products there are:
- certain exported products,
- some real estate operations,
- certain imported products,
- activities with educational purposes,
- medical services,
- certain operations fulfilled by non-profit organizations,
- certain operations fulfilled by the authorities.
VAT registration in France
Companies making taxable products in France must register for VAT. However, French companies that supplied products worth less than 34,600 euros or services worth less than 86,900 euros are not required to register for VAT. Foreign companies providing services and goods in France are also required to register for VAT. In order to start conducting business in France, a company is required to obtain a SIRET number. The company must register with the Register of Commerce and Companies in France and, upon registration, the VAT number will also be allocated.
Companies registered in the European Union that undertake business activities in France are allowed to appoint a VAT representative. If a company does not register or delays the VAT registration, it is subject to penalties in France. Here is an infographic that explains the VAT registration in France:
How can I obtain the SIRET number in France?
Companies in France must obtain the identification number before starting the activities in this country by submitting the documents of the newly formed company. This is the SIRET code or number, also known as the “Système d’identification du répertoire des établissements”. The SIRET number is the same thing with the SIREN number, the unique identification number of businesses in France. This code is issued by INSEE, the National Institute of Statistics, as soon as the company is registered with the Chambre de Commerce for trade or with the Chambre de Metiers, the latter one being available for craftsmen and manual work. The SIRET number can also be issued by URSSAF if the applicant wants to operate as a web designer, translator or is related with any other intellectual services. It is important to know that the SIRET number comprises the SIREN code plus other 5 digits. This important number shows that a company is registered for tax purposes in France. For more details about how to apply for SIRET code, feel free to ask one of our advisors who can tell you more about this procedure and formalities for 2021.
Post VAT registration rules in France
Once the VAT registration is made for a company in France, that company can issue invoices comprising the VAT rate for the products meant for sale purposes on the market. Enterprises with activities in France have the obligation of keeping all the accounts and records for at least 10 years. Extra information about the VAT regulations in France can be solicited from one of our attorneys in France.
VAT reduced rates applicable in France
The 10% VAT rate applies to particular non-alcoholic beverages, inland waterways transport, international and intra-community road transport, amusement parks, some agricultural products, particular pharmaceutical products, domestic waste collection, cafes, bars and nightclubs, particular antiques and collectors items, restaurants, hotel accommodations, take away food and many more. As for the 5.5% VAT rate, this is applicable to a special category of non-alcoholic beverages and foodstuff, particular domestic care services, sanitary protection for women, medical equipment for disabled persons, books, e-books, sports events, school canteens, renovation services, particular cultural events.
It is important to know that particular pharmaceutical products are subject to a 2.1% VAT rate. The same rate is applicable to the purchase of periodicals, newspapers and TV license fees. If you need to know more about the VAT rates applicable in France, we kindly invite you to talk to one of our French lawyers. You can also ask for information about the available accounting services and tax compliance from our experts.
How can we help you with the VAT compliance in France?
Our advisors have a wide experience in business registration, plus related obligations, among which, the registration for VAT in France. We can also handle the VAT refund claims, for EU and non-EU companies established in France, and we can also help you prepare and fil the VAT and INTRASTAT returns in France and/or other European countries. You can also solicit our legal help for registering with the EORI system in France and skip all the bureaucracies involved. A qualified tax advisor stands at your disposal and can give in-depth support and guidance in tax matters, including for VAT in France.
Making investments in France
France is known as one of the most powerful economies in the world and a top destination for investments of any kind. Large companies from abroad have branches and subsidiaries in France and enjoy the excellent business climate and conditions offered. The low tax rates, the skilled and multilingual workforce, and being the most industrialized country in the world make France a solid and preferred candidate for a wide range of foreign investments. The following numbers, statistics and facts highlight the business and investment direction of France:
- around USD 869 billion represented the total FDI stock for 2019 in France;
- according to 2020 Doing Business report issued by the World Bank, France ranked 32nd out of 190 economies in the world;
- Spain, the Netherlands, Luxembourg, Japan, Finland, US and Germany are the main investors in France;
- according to statistics, France is the 12th FDI recipient in the world;
- around USD 18 billion was the total value of the greenfield investments in France in 2019, the sector being subject to a rapid growth in the past few years.
If you want to set up a company and need details about the VAT registration in 2021, you can contact our French lawyers.