Once a company registers for VAT, it acquires certain responsibilities such as having to collect and remit the VAT due on its sales; and, compliance obligation like filing VAT returns. At the same time, it may enjoy the right to deduct owed input VAT through its periodic VAT return as well as make use of various simplification schemes.
The French tax authorities have recently been applying the VAT registration criteria relating to non-resident companies more strictly than in the past. This has led to a larger amount of applications being denied.
We previously reported that France is no longer allowing foreign businesses to submit VAT returns if they are just recovering French VAT. Certainly France, like other EU Member States, is cutting down on administration by minimising the number of remote VAT registrations it oversees.
Generally, under French VAT rules foreign businesses can’t apply for a French VAT registration number on a voluntary basis. They may only do so, if they perform transactions that fall under one of the following categories:
- They have a fixed establishment in France and are involved in cross border supplies of services;
- They are non-resident and perform transactions on which they owe French VAT; or
- They are non-resident and perform transactions which despite not carrying VAT liability, still require to be reported under local VAT rules.
Now is a useful time for companies to check whether their level of business activity in France means that they are eligible to be VAT-registered.
Contact our VAT experts now and find out how this change could affect your business.