Changes to Import VAT in France: Reverse Charge Since 1 January 2022

Since 1 January 2022, the reverse charge system for import VAT has been mandatory and automatic in France, pursuant to Law n° 2019-1479 of 28/12/2019, Article 181. A significant change related to this transfer is that the reverse charge of import VAT is applied via the importer's French VAT returns, which are pre-filled by the tax authorities using customs data, although importers must still check these amounts before filing. It's a game changer as a huge cash-flow benefit will be seen by removing the requirement to outlay cash on import VAT at the border.

How the Reverse Charge for Import VAT in France Works

This is a change that businesses should be aware of and take note of when importing into France. The reverse charge system means that businesses can account for the import VAT on their French VAT return, rather than paying it at the time of importation. This is a significant change and one that can have a positive impact on businesses' cash flow. Businesses should ensure that they are aware of the change and take steps to ensure that their import VAT returns are correctly filed. This is a change that can have a positive impact on businesses if they are prepared for it.

It's also a game changer as a huge cash-flow benefit will be seen by removing the requirement to outlay cash on import VAT at the border. Previously, businesses would have to pay import VAT at the border, which could often be a significant amount of money. Under the new system, businesses declare the import VAT in their French VAT return and can generally deduct it in the same return, so there is usually no net cash payment. This improves cash flow, as businesses no longer need to outlay cash on import VAT at the border, although it does not reduce the VAT cost for businesses that cannot fully deduct it.

If you're doing business in France, it's important to be aware of these changes to import VAT in France. Make sure you understand how the new system works, and how it will impact your business. By doing so, you can ensure that you're prepared for the changes, and that you don't end up out of pocket. A taxable person without a valid French VAT number will not be able to use the self-charge system for import VAT. Businesses established outside the EU that need a French VAT number generally must appoint a fiscal representative in France, unless they are established in a country with a mutual assistance agreement with France.

If you have any questions about this change or how it may affect your business, please do not hesitate to contact us. Global Trade Business can help you ensure that your import VAT return is correctly filed and help you take advantage of the positive impact on your business.

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