10. Other Business Taxes in France

1. Business Rates
2. VAT
3. Payroll Taxes

10.4. VAT - Taxe sur la Valeur Ajoutée (TVA)

TVA (Taxe sur la Valeur Ajoutée) is an expenditure tax imposed on consumers of goods and services.

Companies act as huge tax collectors for the French Government, not least in the collection of TVA, which generates more revenue than any other tax.

TVA is payable on almost all commercial goods and services, with few exceptions.

The most notable of the exceptions is residential property lettings, although the provision of services on a letting comes within the ambit of VAT.

The main rate of TVA in France is 20%, but there is a reduced rate of 5.5% for food, travel, some domestic personal services and most entertainment events.

A reduced rate of 10% is also applicable to repair and improvement works to residential dwellings, but only on the costs of professional labour and materials. It is not available for DIY or for materials only.

So, where you employed a registered company but bought the materials yourselves, the materials would need to be purchased at 20%, whilst the rate on the labour would be 10%.

There is also a rate of 2.1% for medical prescriptions, TV licences, sale of live animals, press publications and certain entertainment events.

i. Turnover Limits 2023/24

In order to quality for exemption from VAT there are basic turnover limits that apply, depending on the nature of your business, as follows:

• Commercial sales and classified furnished accommodation - €91,900.
• Services, unclassified furnished accommodation and professions libérales - €36,800.
• Artists and authors - €47,600.

If you reach these levels of turnover you are obliged to charge TVA, although where these limits are only marginally exceeded by up to a few thousand euros (€39,100 and €101,000), TVA need not be imposed for two years, including the year in which the limit was exceeded. This tolerance does not apply in the first year of activity where rule is also pro-rata.

ii. Turnover Limits 2025

From 2025 there will be new limits, as part of an alignment throughout Europe.

From 1 January 2025, the following new provisions will apply.

For those who provide services:

• the turnover must not have exceeded €37,500 (for 12 months) , which can only be exceeded for one year, up to a maximum of €41,500

For the sale of tangible goods, sales for consumption on the premises or the provision of accommodation services:

• the turnover must not have exceeded €85,000 (for 12 months), which can only be exceeded for one year, up to a maximum of €93,500

So there will be a slight change in the exemption thresholds and the period of tolerance for exceeding these thresholds has been reduced from 2 years to 1 year.

There are slightly different exemption limits for lawyers, writers and performers.

Those arrangement for artistic professions you can read our article Becoming an Artist or Author in France.

In addition to changes in the national limits, it will become possible for companies to benefit from the exemption regime, not only in their State of establishment, but also in other EU Member States, provided that they do not exceed an annual turnover ceiling set at European level at €100,000.

As a result, companies whose head office is in France will be able to trade in other Member States under the exemption regime applicable there, provided that they have identified themselves in France and transmit to their tax office, on a quarterly basis, the turnover achieved in each Member State.

In the other direction, companies whose headquarters are located in another Member State will benefit from national exemptions, provided that they complete the same formalities in their State of residence.

Finally, companies whose headquarters are located in a third country will benefit from this same mechanism, provided that they have identified themselves in a Member State of their choice where they are established.

iii. Registration

If you decide you wish or need to opt for payment of TVA you simply need to write/send a mail to your local tax office - Service des impôts des entreprises. The quickest way is simply to use your 'messagerie' in your income tax account.

If you have sales of over €10,000 outside of France/In Europe, you need a European VAT number. (numéro de TAV intra-communautaire)

An official sample letter that you can use is available at Demande d'attribution d'un numéro de TVA intracommunautaire.

If you become VAT registered, for suppliers or customers based in Europe you have to complete a DES Declaration Europeenne de Services.

iv. Declaration

In terms of payment, in the first year payment is made in May for the previous year.

In the second and subsequent years, in July and December, you will be required to make provisional payments based on your previous declaration, although if, based on your previous declaration, the balance due is less than €1,000 none are necessary.

Credits higher than €150 are reimbursed (with delay!); in other cases they are imputed against future payments.

It is possible to go on-line using your Impôts business account to make the declaration. However, our strong advice would be to contact a good VAT accountant, as it is not for the faint-hearted.

The form used for the TVA declaration is for regime reel companies is CA12, and only the brave dare to try and understand and complete it!

If the TVA paid is greater in any period than the TVA received then you may elect to either seek reimbursement or arrange a credit against the next declaration.

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