This option should help reduce the number of claims

Intra-Community VAT rules have changed by the Finance Act Amendment 2005 (No. 2005 - 1720 of December 30, 2005), now codified under the General Code of taxes (CGI) 283.1 article. They must now be taken into account by the French and foreign operators since September 1, 2006.

Previously, a taxable person not established in France realized transactions subject to VAT on the national territory should, in principle, to identify VAT, or designate a tax representative if he was not a resident of the European Union, and charged the French VAT to his client. Exceptions were, however, apply to certain transactions for which, under certain conditions, the VAT was due by the French client mechanism said of the "reverse". This rule applied especially to the so-called intangible benefits (Council, advertising, telecommunications, etc.), to the benefit of intra-Community transport, or in the work and expertise on tangible personal property.

Subject on September 1, 2006, The tax administration has recently commented on this measure (instruction No. 3 A-9-06 of June 23, 2006) and indicated that, except in special cases, the new device apply so general and mandatory to all transactions carried out by a foreign operators destined to customers identified for VAT in France, that they themselves established or not in France.

This change should have a significant impact on a daily basis for many operators. Consider, for example, a Spanish company that has a stock of goods in France and distributes to its French customers using this stock. Until 1 September, she had to charge VAT on the sales of goods to its French customers. From this date, the Spanish company must more charge French VAT on these operations and this VAT must be paid by the client himself.

The penalties incurred

French customers using foreign suppliers of taxable operations in France will have in the future, be vigilant. Any lack of "reverse" of these operations by the French client may result in a penalty equal to 5 of the deductible VAT. In addition, any VAT that would continue to be billed, incorrectly, by foreign operators will be in principle non-deductible for French customers. French companies will therefore have to assimilate these new rules quickly and anticipate their consequences, by identifying each of the operations concerned with their foreign suppliers, by preventing these suppliers and by re-setting systems computer, accounting and declarative.

Meanwhile, foreign operators, can no longer charge French VAT, will have to manage new situations of credit of VAT (import for example VAT or VAT invoiced by their French suppliers) and file more important applications for refund that will have to finance. On this point, the tax administration has provided a tolerance for, in practice, to the foreign seller, via a "sponsor" certified, to continue to collect the VAT in the name and on behalf of the French client and to charge its deductible VAT on this VAT collected. This option should help reduce the number of claims. However, it must be used with caution, the person liable legal VAT remaining French client failure "response".

Finally, foreign operators must, moreover, ensure not too quickly denounce their identification VAT in France. The new device does exempt them, indeed, not necessarily from the requirement to fill in France of formalities, including in cases where they will continue to make statements of trade in goods. Will this remain mandatory, for example, according to the administration, in the case of intra-Community acquisitions of goods resold in France or sales with installation in France of equipment from other Member States of the European Union.