How does VAT work in France?

There are three VAT regimes to which a business may be subject to:

the basic VAT exemption scheme, which exempts businesses from paying VAT
the simplified VAT scheme, for which businesses must make an annual VAT return
the normal ‘real’ regime, for which companies must make monthly VAT returns.

Basic VAT exemption scheme

There are specific requirements which must be met if a company is deemed exempt from paying VAT. Namely, a low annual turnover (85 800 € for goods & services and 44 500 € for legal services).

The basic VAT exemption scheme means that some corporations do not have to make any VAT tax returns.

There are some activities which are excluded from VAT exemptions:

Agricultural sector (this has its one VAT scheme)
Real estate transactions
Intra-community (EU single market) transport supplies

Simplified VAT scheme

In this case, corporations are taxed according to their profits – only one tax return and payments needs to be made every year.

Once in July (55% of the VAT due in July of the previous year)
Once again in December (40% of the VAT due in July of the previous year)

To be eligible for this scheme your company must have an annual turnover of between: 85 800 € and 818 000 €. These businesses must also only be paying less than 15 000 € in VAT annually.

Many corporations however, choose to opt for the normal ‘real’ VAT scheme.

Normal ‘real’ VAT scheme

This scheme is for corporations who pay more than 15 000 in VAT yearly.

For this scheme VAT must be paid each month online. If the annual amount of VAT is less than €4 000 you can opt for a quarterly declaration payment.

With this in mind, if you think that you might need extra support with these schemes, please do not hesitate to get in touch.