The government is adjusting the VAT rules in order to try to limit the sale price of certain equipment and personal hygiene products essential in the fight against Covid-19 virus. VAT should recover its social and economic role here.
Thus, the Amending Finance Bill for 2020 published on 26 April 2020 provides for a temporary application of the reduced VAT rate of 5.5% (provided for by Article 278-0 bis, K bis and K ter of the French tax code), instead of the VAT rate of 20%, to supplies and intra-Community acquisitions of the following products:
- Masks and protective clothing suitable for combating the covid-19 virus, for which the list and technical characteristics will be laid down by joint decree of the Ministers responsible for Health and the Budget. The reduced VAT rate applies retroactively as from 24 March 2020
- Products intended for personal hygiene and adapted to the fight against the spread of the covid-19 virus, for which the characteristics will be set by joint decree of the Ministers responsible for the budget and the environment. The reduced VAT rate applies retroactively as from 1 March 2020.
The reduced VAT rate will be applicable until 31 December 2021.
As the effective dates are retroactive, taxable persons will have to draw the consequences at their level.
This measure, which completes the VAT measures already put in place to deal with this health crisis, is welcomed.