In order to facilitate the operation of the VAT credit system and the verification of due payment of VAT, all invoices sent by VAT taxpayers to their clients, other than governmental organisms and individuals that are not Traders, must be dated and numbered and must contain, inter alia, the following notations: the name and the address of the client, the name and the address of the seller or the person who renders the services, the identification number of the seller or the person who renders the services, the quantity, nature and unit price before the imposition of VAT of each good sold or service rendered, the date of the transaction, the rate of VAT, or exemptions if any, applicable to and the amount of VAT imposed on each good sold or service rendered, the price reductions, the total amount payable before the imposition of VAT and the total amount payable, including VAT.
The invoice may be issued by the VAT taxpayer himself or, in his name and on his behalf, by his client or by a third party. Such issuance must occur as soon as the supply of goods or rendering of services is completed. The amounts which appear on the invoice may be expressed in any currency provided that the amount of VAT to be paid is expressed in euros using established conversion rates. Invoices established in a language other than French may be required by the tax authorities to be translated into French. Invoices may be sent on paper or by electronic means. Any document or message which amends and refers specifically and unambiguously to the initial invoice is deemed an invoice and must contain all of the obligatory elements described supra.
[ii] Accounting Requirements.
All taxpayers subject to VAT are, as a general rule, required to maintain accounting records which permit the tax authorities to determine not only their turnover, but, in addition, which of their economic activities are taxable and the rate of VAT applicable to each. Such records must also permit the verification of the VAT credits claimed by the taxpayer.
Where the normal accounting requirements are too cumbersome for a taxpayer, he may be permitted to use certain alternative methods of accounting; VAT will be assessed in function thereof.
Specifically, VAT may be assessed:
1. on the basis of a simplified accounting system or
2. on the basis of the constructive taxable economic activity of the taxpayer where he is engaged in retail sales which do not permit him to invoice each customer.
[iii] VAT Return.
Each taxpayer who is subject to VAT must file a VAT return with the tax authorities. The VAT return (Form No. CA 3) must be filed each month by taxpayers subject to the normal accounting regime and must set forth the amount of taxable economic activities, VAT liability and VAT credits for such period, the amount of intra-Community acquisitions and the corresponding VAT, and the amount of intra-Community deliveries. Payment of the excess of the taxpayer’s VAT due over his VAT credit must be enclosed with the VAT return
Unless they opt to file the VAT return on a monthly basis, taxpayers subject to the simplified accounting system pay VAT on a quarterly basis and need file only a single VAT recapitulatory return (Form No. CA 12) before April 30 of the following year.
A taxpayer’s failure to make timely payment of VAT subjects him to late payment interest equal to 0.40 percent of the unpaid tax per month plus a penalty of 5 percent. Any excess VAT credit may be carried forward to the following month or be the subject of a request for a refund.
[iv] Appointment of VAT Representative By Non-Domiciliaries.
A Non-Domiciliary that is not established in a Member-State of the EU that carries out economic activities in France which are subject to VAT must appoint a VAT representative that is liable for the payment of any VAT owed by such Non-Domiciliary. Such VAT representative is also responsible for the issuance of proper invoices, the keeping of separate accounting records and the filing of VAT returns on behalf of the Non-Domiciliary. A Non-Domiciliary normally appoints the person to whom he sells taxable goods or renders taxable services as his VAT representative. Such representative, or the client of the Non-Domiciliary if the latter fails to appoint a VAT representative, is liable not only for VAT due by, but also for fines or penalties imposed on, the Non-Domiciliary.
[v] Identification Number.
With respect to intra-Community operations, each company subject to VAT in France has received an identification number which can be checked by other EU companies prior to any exchange of goods or services. This number must be mentioned on all invoices relating to intra-Community transactions.
[d] Rates of Tax.
After it has been determined that an economic activity is subject to ordinary VAT, as opposed to Real Property VAT, and that the occurrence triggering VAT liability has taken place, one of two main different rates of tax will be applied to the tax basis depending on the type of goods sold or services rendered, with the exception of certain specific rates applicable to particular transactions or goods. A standard rate of 19.6 percent is applicable to all economic activities other than those which are expressly exempt from VAT or are subject to a reduced rate. Most services are subject to the standard rate. Additionally, where a real property transaction is subject to VAT, the standard rate applies. A reduced rate of 5.5 percent is applicable to, inter alia, the following goods and services: basic staple food products, hotel lodging, meals supplied to employees, motion pictures, original artworks, plays, concerts and certain other forms of public entertainment, certain animal food products and books .