French VAT rates and VAT compliance

As an EU member state, France follows EU rules on value added tax (VAT) compliance. France is still free to set its own standard (upper) VAT rate, providing this is above 15%.

The standard VAT rate in France is 20%. There are also reduced VAT rates of 10% and 5.5%, and a super-reduced VAT rate of 2.1%. The French super-reduced rate is the lowest in the EU, and includes TV licences, certain pharmaceutical products, certain newspapers and periodicals, and admission to certain cultural events.

Suppliers of goods or services that are VAT registered in France must charge the appropriate VAT rate and collect the tax for onward payment to the French tax authorities through a VAT return.

Resident businesses selling business-to-business (B2B) and business-to-customer (B2C) goods have a VAT registration threshold of €85,000, or €37,500 when selling services. There is no VAT registration threshold for foreign (non-EU) businesses operating in France. Find out more about VAT registration in France.

Domestic and foreign businesses registered for VAT in France are typically required to submit monthly VAT returns. Domestic businesses with an annual VAT liability under €4,000 can submit quarterly returns. Businesses from non-EU countries are usually required to file their VAT returns on a monthly basis via a fiscal representative. Read more about French VAT returns.

The tax point rules in France determine when the VAT is due. For imports, it is the time of importation according to relevant import documents. For goods, it is considered as the point of transfer of title. Any VAT due should then be declared in the corresponding VAT return. The tax point for French services is when performed, unless payment is made in advance of the completion of service. In this case, the payment date becomes the tax point.

In France, the VAT rate on food products depends on the type of goods sold and how they’re packaged, and the context in which the goods are bought or served — specifically, the expected consumption period.

Includes foods that are stored in airtight containers, with expiry dates, such as those sold in supermarkets (instead of a catering business). These are food products that can or are expected to be consumed at a later date, and do not need to be consumed immediately. The VAT rate for these goods is 5.5%.

Some products served in restaurants also have a VAT rate of 5.5% if they can be consumed later. These include bottled water, non-alcoholic canned drinks, and food that typically comes in packages, such as crisps.

Includes foods that are intended to be consumed immediately, such as foods served in restaurants, cafés, bakeries, bars, and fast-food outlets. Also included are food products that are served at catered events. The VAT rate for these goods is 10%.

The sale of alcohol in France is subject to a VAT rate of 20% (for drinks with an alcohol strength of 1.2% or higher and for beers with alcoholic strength of 0.5% or higher), regardless of being served alone or with other food products with a lower rate. Alcohol can never benefit from lower rates that are applied to on-site dining (immediate consumption).

In France, items considered as ‘luxury’ for tax purposes are expensive non-essentials such as jewellery and precious stones, high-end cars, high-end watches, boats, caviar, works of art, and tobacco and cocoa-based products. All luxury goods (those that are outside basic necessities) are charged at the normal VAT rate of 20%.

The goal of taxing luxury items in France, as in other EU countries, is to regulate consumption of high-end items, in addition to generating revenue for the French state.

There are a small number of VAT exemptions in France. Exports of goods from France and goods transacted as part of intra-community supplies are exempt from VAT. Also exempt from VAT are teaching activities, and a small number of banking, financial, and medical transactions.

These are two inventory management arrangements used by businesses supplying goods in France. These models affect VAT registration, reporting, and compliance differently.

A foreign supplier stores goods at a warehouse in France, and ownership remains with the supplier until the goods are sold. The customer only takes ownership when the goods are withdrawn for sale. The supplier is required to register for French VAT and charge VAT at the time of sale, unless it is a B2B sale subject to the reverse charge rule. Monthly Intrastat reports may be required if goods are moved cross-border.

Goods are stored in France, but the customer is already pre-identified and will purchase them at a later date. The customer takes ownership immediately upon withdrawal, but the supplier retains the stock until then. The supplier can avoid VAT registration by applying EU simplification rules under the following conditions; the supplier and customer are both VAT-registered in different EU countries, the supplier reports the transfer in the EC Sales List (ESL) and their Intrastat declaration, the customer self-accounts for VAT under the reverse charge mechanism, transfer of ownership happens within 12 months and there is no change of ownership during storage.

Businesses operating in France, including non-resident businesses, may be eligible for VAT recovery on certain goods and services, including business travel expenses, some professional services, marketing and advertising costs, and import VAT on goods. The VAT recovery process depends on the following types of business:

• French businesses can apply for domestic VAT recovery through their regular VAT return. They would need to provide valid VAT invoices.
  

• EU businesses can use the EU VAT Refund Mechanism (commonly referred to as the 8th Directive refund claim) and submit a refund request via their home country’s tax portal, provided they are not VAT registered in France. If they are VAT registered in France, any French input VAT related to their activities in France must be recovered through their periodic French VAT returns.
  

• Non-EU businesses can apply for refunds through the non-EU VAT Refund Scheme (commonly referred to as the 13th Directive refund claim) via a direct submission to the French tax authorities (Service de Remboursement de la TVA). However, these businesses must not have an obligation to register for VAT in the country where VAT was incurred and must check if their country has a reciprocity agreement with France.

French businesses trading goods or services with other EU member states must submit an EC Sales List (ESL). These monthly reports are filed as two separate returns in France:

• VAT recapitulative statement (état récapitulatif des livraisons de biens intra-UE) for EC sales of goods (previously known as DEB)

• DES return (déclaration européenne des services) for EC sales of services.

  
  

There is no threshold.

For both ECSL of goods and services, the following information must be included:

• Customer’s EU VAT number

• Total value of goods/services supplied

• Month of the transaction

• Transaction code

Intrastat returns in France are known as EMEBI, which stands for "Enquête Mensuelle Statistique sur les Échanges de Biens Intra-UE" (Monthly Statistical Survey on Intra-EU Trade in Goods). These returns must always be submitted on a monthly basis.

Only selected businesses are required to file EMEBI returns. In principle, this obligation applies to companies carrying out intra-Community transactions in France that have been specifically notified by the authorities. Businesses should not file returns spontaneously. Each year, the French administration defines a sample list of companies required to participate in the survey and informs them by letter in the last quarter of the preceding year.

Previously, a threshold of EUR 460,000 applied to both Arrivals and Dispatches, but this no longer applies according to the latest official guidance.

Companies required to file EMEBI must report all movements of goods between France and other EU member states. The declaration includes several essential data points, such as:

• Customer’s EU VAT number

• Country of origin of goods

• Country of dispatch or destination

• CN8 commodity codes

• Value and quantity of goods

• Mode of transport

• Transaction codes

  
  

If there are no reportable intra-Community transactions in a given period, a nil return must still be submitted.

Standard Audit File for Tax (SAF-T) is an electronic file format (typically XML-based) developed by the Organisation for Economic Co-operation and Development (OECD). The format is designed to standardise the exchange of accounting and tax data between businesses and tax authorities. SAF-T has been adopted by several countries, including Portugal, Poland, and Norway. However, France never adopted SAF-T. Instead, France uses Fichier des Écritures Comptables (FEC) — a specific electronic accounting file required during tax audits.

There are generally five reporting requirements:

1. General ledger and supporting journals
2. Accounts payable, including supplier master data and invoices
3. Accounts receivable, with customer master data and invoices
4. Warehouse inventories, and master data
5. Fixed assets ledger, including amortisation

An FEC accounting file is required for tax audits and must be provided upon request by tax authorities. It must be provided in a structured digital format such as CSV, TXT, or XML. The FEC includes structured accounting and transactional data. The key fields include:

• Journal code and label

• Accounting entry number and date

• Account number and label

• Auxiliary account number and label, if applicable

• Transaction reference and date

• Transaction label (description of the transaction)

• Debit and credit amount

• Transaction amount in original currency, if applicable

• Currency code (e.g. EUR)

• Reconciliation reference and date

• Validation date of the accounting entry