The French tax authorities have reconfirmed in the recent Finance Bill that the VAT rate changes will take effect on 1 January 2014. The changes will consist of:
- The standard rate will increase from 19.6% to 20%;
- The intermediate rate will be increased from 7% to 10%. This rate will apply to various goods and services including restaurants and meals for immediate consumption, passenger transport, hotel accommodation, pharmaceutical products not reimbursed by social security and transfers of copyrights.
- After a recent change to initial plans, we understand the reduced rate should not be reduced from 5.5% to 5%. This rate applies to certain supplies related to basic necessities (e.g. water, food not immediately consumable, school canteens, energy and qualifying goods and services to disabled persons).