Starting 1 January 2022, France is making Postponed VAT Accounting automatic and mandatory for all businesses VAT registered under the standard French VAT regime. This is good news for traders importing into France who should benefit from a significant cashflow relief.
What is Postponed VAT Accounting?
Postponed VAT Accounting is a scheme that allows VAT-registered importers to account for import VAT on their periodic VAT returns, rather than at the point of importation. Essentially, traders using Postponed VAT Accounting declare and recover import VAT simultaneously on their VAT return without paying import VAT upfront.
Multiple countries have a Postponed VAT Accounting scheme in place, notably Ireland and the UK. Some EU countries -the Netherlands for example- require a specific licence to use Postponed VAT Accounting that can only be granted if the company appoints a local fiscal representative. This can be a costly and lengthy process, and we always encourage traders to weigh the pros and cons of going down this route if it makes sense for their business.
Luckily, not all countries make it difficult for non-resident businesses to defer the accounting and payment of import VAT and France is about to make traders’ life even easier.
Using Postponed VAT Accounting in France
Up until 31st December 2021, businesses willing to use Postponed VAT Accounting in France would need to submit an application to the customs office where they lodge customs declarations in France. However, in our experience, the timeline in which to obtain the authorisation is unclear and non-resident businesses would not necessarily know in advance where they should send their application.
What is changing in France?
As of 1 January 2022, Postponed VAT Accounting will become mandatory and automatic for all businesses registered for VAT in France under the standard regime (referred to as ‘régime réel normal d’imposition’).
Applications for the scheme will not be required to benefit from this simplification which should relieve foreign traders from the uncertainty of knowing whether they are authorised to use the scheme or not.
How will import VAT be accounted for in France from 2022?
With the expansion of Postponed VAT Accounting, Import VAT in France will be dealt with by the tax office rather than the customs authorities. The information completed on the customs declarations will be transferred to the tax authorities and be reported on the French periodic VAT return ‘CA3’ form. Based on the information recorded on the customs declarations, the CA3 form is expected to be partly prefilled and traders will need to make sure the information is correct before submitting their French VAT returns.
To support importers in checking their import data when submitting their French VAT returns, the French authorities are launching a new dedicated portal in February 2022. The portal will allow traders to view the imports they have made in France in any given period and make sure they are submitting VAT returns correctly.
How can you prepare for the change?
If you are registered for VAT in France under the standard tax regime, you can expect import VAT to be accounted for in your VAT return rather than upon importation without the need to ask for any authorisation. From February 2022, you should be able to consult the new dedicated portal as it will be your responsibility to make sure accurate information is submitted in your French VAT return.
If you are not registered for VAT in France but want to act as an importer of record in the country, you must obtain a French VAT number to do so.