VAT : IMPORTING EU GOODS INTO FRANCE
Importing goods from another EU country into France is called an intra-community acquisition.
Intra-community acquisition of goods for resale in France
When a foreign company introduces goods in France from another EU country, the transaction will follow a specific taxation scheme. The payment of VAT to the supplier located in the other EU country will depend on the VAT liability of the importer in France.
On one hand, if the non-French entity (the importer) is registered for VAT in France, its EU supplier will apply a zero-rated VAT. It means that no tax will be charged in the other European country. The foreign company importing in France will have to self-account VAT on its French periodic VAT return, resulting in nil payment of tax due to the deduction under reverse charge mechanism.
On the other hand, if the overseas business is not registered for VAT in France, its EU supplier will charge local VAT on the transaction. The reclaim of such VAT is very often difficult and even impossible in some Member States.
A Swiss company (non-EU business) gets a purchase order from a French customer. The latter is registered for VAT purpose in France. In order to supply the goods, the Swiss company purchases them from a supplier located in Germany. The Swiss company requests a direct delivery from Germany to the premises of the final client in France.
If the Swiss company is not registered for VAT in France, the German supplier will charge local VAT on the transaction. However, the Swiss company can avoid paying German VAT by choosing to be registered for VAT in France. Getting a VAT number in France will enable the Swiss company to purchase VAT excluded (from the German supplier) and resell the goods also VAT excluded (to the French customer).
A Danish company (a EU business) purchases goods from a supplier located in UK. The goods are dispatched by truck to the French warehouse of the Danish company. The inventory is handled by a fulfillment company which dispatches later on the goods to the final customers of the Danish business.
The Danish company should request a French VAT number in order to avoid paying VAT that might be charged by the UK supplier. The Danish company will also use this tax number to file its French VAT returns and Intrastat declarations (if necessary).
Intra-community acquisition of goods for processing in France
Sometimes, the introduction of goods into France (from another EU country) is for purpose of processing, transformation or assembling. In such cases, the goods imported are delivered in the premises of the service provider, but the ownership remains to the overseas company. After the processing or the assembly, the goods can either be sold to French customers or re-exported out of France.
When EU goods are introduced into France with an intention of processing, the foreign owner has to be registered for VAT purposes. There is however an exception in the case where at the end of the transformation, the goods are returned to the Member State where they were imported from.
A Dutch company orders spare parts from a supplier located in Belgium. The goods are shipped directly from Belgium to the processing company of the Dutch client (located in France). The French supplier will assemble the spare parts in order to obtain a single product. The finished product will be exported from France to a final client located in the USA.
By getting registered for VAT in France, the Dutch company will avoid to pay VAT that might be charged by the Belgium supplier. Furthermore, the Dutch company will be compliant with VAT obligations related to its taxable activities in France.