France has updated its VAT registration thresholds for 2024, impacting small and medium-sized enterprises (SMEs). The thresholds are now:
- €34,600 for goods: This threshold applies to businesses involved in the sale of goods within France.
- €86,900 for services: This threshold is for businesses that provide services within France.
These thresholds are crucial for SMEs, as exceeding these amounts necessitates VAT registration and compliance with related obligations, including VAT returns and record-keeping.
Applicability to Foreign Businesses
For foreign businesses, these thresholds do not apply. Regardless of turnover, foreign companies must register for VAT in France upon making their first taxable transaction. This includes non-EU companies, which must appoint a fiscal representative in France to manage VAT obligations unless a mutual assistance agreement exists between France and the company’s home country.
Distance Sales Thresholds
Businesses engaged in distance sales (online sales of goods shipped from another EU country to a French consumer) must register for VAT if their annual sales exceed €10,000 across the EU. This threshold is part of the EU-wide regulations to streamline VAT obligations for e-commerce businesses under the One-Stop Shop (OSS) scheme.
Registration Process
Businesses must obtain a SIRET number, an identification number issued upon registration with the Register of Commerce and Companies, to register for VAT in France. This ensures that the business is recognized for tax purposes.
Compliance and Penalties
Failure to register for VAT on time can result in significant penalties, including late registration penalties, late filing penalties, and fines for providing inaccurate information. Businesses must ensure they meet all registration and reporting requirements to avoid these penalties.
Post-Registration Obligations
Once registered, businesses must adhere to ongoing VAT compliance, including issuing VAT invoices, maintaining records for at least 10 years, and filing periodic VAT returns. France also has various reduced VAT rates for specific goods and services, such as a 5.5% rate for certain foodstuffs and medical equipment, and a 10% rate for restaurant services and hotel accommodations.
Upcoming e-Invoicing Requirements
From July 2024, France will introduce mandatory e-Invoicing for businesses in a phased approach, starting with large companies and eventually including SMEs by January 2026. This measure aims to combat tax fraud, streamline VAT reporting, and reduce administrative burdens.
