France to End VAT Administrative Concession from October 1; Foreign Companies Affected
France has announced it will, from October 1, 2012, remove an administrative concession that allows foreign companies without a local establishment to register and collect Value Added Tax (VAT) due by its customers under the reverse charge mechanism
- (1888PressRelease) July 26, 2012 - Sunnyvale, CA - France has announced it will, from October 1, 2012, remove an administrative concession that allows foreign companies without a local establishment to register and collect Value Added Tax (VAT) due by its customers under the reverse charge mechanism. The move aligns French law with the EU tax laws.
France VAT Concessions: The Background:
The current French VAT reverse charge allows VAT registered customers (whether established or non-established in the country) to pay VAT if the supplier of goods is not established in France.
However, as per the French administrative concession referred to as "respondent concession", the supplier has the scope to collect the VAT owed by its customer and compensate the same against the VAT outstanding by the supplier. To benefit from this concession, the non-established seller is required to register for VAT and employ a delegate for tax declaration and payment purpose in France.
France VAT Concessions: The Background:
Foreign companies that are not established in France but supply goods or services to VAT-registered companies in France must now re-examine how they make their French VAT recovery and if they should retain their French VAT registration. In addition, they must notify the French tax authorities and conform to some formalities. Foreign companies may also need to re-work their invoicing processes and clearly state that VAT is due by the client or customer.
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