When you are doing business in a foreign country, registering for taxes is compulsory. The Value added tax (VAT) is charged on the sales of some goods and taxable services. Every company operating taxable business transactions here must register and acquire a VAT number before commencing business. Failure to comply with this obligation may lead to facing financial penalties and attracting unwanted fines. Aside from registering, one must file tax returns on either a monthly, yearly, or quarterly basis.
If you are interested in setting up a business here, you must learn about the tax system of the government. This guide provides information on the tax, the rates, and how to register among others.
Eligibility
A business in the country must register it provide it stores goods here, sell them to customers based within the territory, and have sales that exceed the French domestic threshold of €82,200. A company in a different EU country must register for it in France if it stores goods locally, sells to French-based customers (non-business), and has sales that exceed the local distance selling threshold of €35,000.
Types
There are four types of VAT charged at various rates on the sales of goods in the country. 20 percent standard rate is charged on all goods and services taxable, and a 10 percent rate applies to domestic flights, agricultural supplies, etc. 5.5 percent is levied on printed books, amongst others.
A company not incorporated here but provides taxable supplies of goods or services to residents in the state must acquire a non-resident VAT number. According to the EU VAT Directive, foreign business owners are legally obligated to register for VAT to report taxable transactions and declare VAT that must be charged. It is quite important for all companies carrying out any commercial activity here to register before starting taxable transactions if applicable.
Processing Time
It takes at least a month to process the application and acquire the tax number.
Documents Required
Only a few business documents are required for the tax registration. They include but are not limited to, a certificate of incorporation, copies of Articles of Association, bank statements, VAT Certificate from the local country, registration documents and a Power of attorney, etc.
Hiring A Fiscal Representative
Foreign companies owned by non-EU nationals must hire fiscal agents to stand in for them during tax registration. The agents under a local company based here will stand in for the business to the authorities and be held responsible for all VAT obligations including VAT debts owned. European corporations do not need a fiscal representative. However, for smooth and easy relations with the local tax authorities, they may choose to hire an agent to standard in for them during registration.
Thresholds of Value Added Tax
For EU VAT-registered businesses that sell goods online to customers here, (distance selling), a threshold of €35,000 per annum applies. Foreign businesses trading here are VAT/GST/Tax registered in their home state, there is no registration threshold.
VAT Returns
The types of VAT returns include the following: monthly returns (all entities upon registration starts with monthly filing unless they fall under the rules of a special scheme). Quarterly returns (if the annual VAT liability is under €4,000 then filing periods). The VAT filing for a non-resident company is due on the 19th of the month after the period end.
