EXPORTING GOODS FROM FRANCE TO OTHER COUNTRIES
Foreign companies shipping goods out of France to a destination in the European Union or outside European Union are required to be registered for French VAT. Even if exports are zero-rated supplies, each transaction has to be reported on the VAT return submitted to the French Tax Administration.
Example 1: Exporting goods purchased in France
A Canadian company buys goods from a French manufacturer and requests a direct delivery to a final customer located in the UK. All the parties involved in the transaction are registered businesses, each one having a VAT or GST number.
The Canadian company doesn’t have a VAT identification number neither in France, nor in the UK. However, it is deemed to act as the official exporter for the dispatch of goods between France and United Kingdom. The status of exporter of record is not modified for the simple reason that a third party (the French manufacturer) is arranging the shipment on behalf of its overseas customer (the Canadian company).
In this scenario, the Canadian company will have to be registered for VAT in France for 3 reasons:
- Recover VAT charged by the French manufacturer (the standard VAT rate is 20%)
- To act as the official exporter and report the transaction on VAT and Intrastat returns
- To be able to reduce the sale price by invoicing the UK customer with zero-rated VAT
Example 2: Exporting goods after processing in France
A Hong Kong company acting in the plastics industry purchases vinyl products from a French supplier. The package is dispatched to a service provider in France for processing. The new product obtained is shipped few weeks later to Hong Kong.
In order to be able to recover the VAT charged by the French supplier, the Hong Kong company should be registered for VAT in France and file periodical VAT returns. The appointment of a tax representative located in France is also mandatory in this case.