November 17, 2021
From 1st January 2022, the French tax administration have announced that ALL import VAT will be automatically and mandatorily be deferred to the French VAT return under the reverse charge mechanism for tax payers who hold a French VAT number.
This is great news for businesses using France as a clearance hub as this will create a huge cashflow advantage. Instead of paying the VAT on import, the calculated amount will be automatically recorded in their VAT return under the reverse charge mechanism. This means that VAT due will appear automatically on your VAT return by the 14th of the month and be deductible in the same VAT return.
Tax payers who have a French VAT number and import goods through France will benefit from an extended deadline of the 24th of the month to file and pay their taxes. The old deadline was 19th and still exists for those who do not import.
The change comes into place as a result of the competence of import VAT being transferred from the Customs authorities (the DGDDI, standing for Direction Générale des Douanes et Droits Indirects) to the Tax authorities (the DGFiP standing for Direction générale des Finances publiques).
The import VAT reverse charge will be mandatory and automatically applied.
Currently, businesses importing into France will have to pay import VAT and either claim this back through their VAT return or the 13th Directive which can take an extended amount of time (up to 6 months). This creates a cashflow issue for many businesses. Currently, if you wish to defer import VAT in France then you need to request authorisation from the customs authorities and meet the conditions to receive an import license. Once received, you can then reverse-charge the VAT and report this on your VAT return.
The current requirements are:
From the 1st January 2022, all of these conditions will not be necessary.
Your French VAT return will be adapted to facilitate the new changes:
The pre-filled amount of import VAT is still the tax payers’ responsibility to check accuracy and can be modified if necessary. The business will also need to obtain the relevant import documents before validating.
All businesses will be affected by the change because the simplification is mandatory for companies with a valid intra-community VAT number in France when importing into the country. If you do not have an intra-community VAT number in France and you are making imports in France, then you will need to apply for VAT registration.
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