Implementation of French VAT rise to 20% 1 Jan 2014

Plans to increase the French VAT rate from 19.6% to 20% in 2014 were announced last week.

From 1 January 2014 the 20% French VAT rate should be applied on taxable supplies.  Below is a summary of the implementation rules for transactions and supplies of goods and services which span the rate change.

• For goods, the tax point is the date when the goods are supplied.  This is when the goods are under the control of the customer and it takes legal title.
• For services, the tax point is the date of the provision of the service.  Where there are staged payments spanning 1 January, the date of payment should be used to determine the appropriate VAT rate.
• For imported goods, the tax point is the date when the goods are cleared through customs and released into free circulation for consumption.  For goods held in bonded warehouses with suspended VAT, then the date of release should be used to determine the correct VAT rate.
• For intra-community supplies of goods, the VAT point is 15 days following the month in which the supply was made.  The exception to this rule if an invoice has been issued before this date – in which case the invoice date applies.

• For corrections after 1 January 2014 to old invoices (credit notes etc.), the 19.6% VAT rate should be used.
• VAT registered businesses will be permitted to issue invoices in 2013 with the new 20% VAT rate if there is certainty that the supply will take place after 1 January 2014.