[a] Event Triggering VAT Liability.
Two events must be distinguished with respect to VAT liability: the event which triggers the imposition of VAT and the event by which VAT is due to the tax authorities. These events differ in function of the economic activity on which VAT is levied. The event which triggers the imposition of VAT differs in function of the economic activity on which such tax is levied. Where the taxable economic activity is a sale of goods, the event which triggers VAT liability is normally the actual transfer of title to the goods sold to the purchaser. In practice, this event is generally deemed to take place when the goods are delivered and the seller enters the sale on his books by crediting a client account and issuing corresponding invoices. Upon the occurrence of such event, the VAT becomes due and the customer has the right to claim a VAT credit. However, the tax becomes due upon the sending of an invoice, provided the invoice precedes the above due date and the invoice is not an interim invoice.
Inasmuch as the importation of goods into France is subject to VAT even where no sale takes place, the foregoing general rule is not applicable to imports. Instead, the occurrence that triggers the imposition of VAT on imports is the passage of the imported goods through French customs.
Where the taxable economic activity consists of the rendering of services, VAT liability is triggered upon the performance of the services and VAT is due upon the receipt of full or partial payment therefore. Taxpayers who render services subject to VAT may opt to pay VAT on an accrual rather than on a cash basis. Where such option is made, VAT must be paid on all debits duly posted on the books of the taxpayer even where the person to whom such service is rendered fails to make payment.
[b] Tax Basis.
The tax basis on which VAT is imposed is calculated by aggregating all of the consideration received or to be received by the seller or supplier as compensation for such economic activity together with all insurance premiums, commissions, interest and similar expenses of the seller charged to the purchaser as well as certain taxes imposed on the transaction. The taxable basis excludes the amount of VAT paid by the taxpayer as well as all discounts, rebates and reimbursements of expenses accorded to the purchaser. Where VAT is imposed upon the importation of goods, the tax basis may be adjusted upward by, inter alia, certain royalties, commissions and brokerage fees paid by the French importer which relate to the imported goods.