Finance Law for 2018 and Corrective Finance Law for 2017: main VAT measures

This year, the new measures included in the Finance Law do not introduce significant changes in the VAT rules but include interesting information.

Indeed, some simplification are introduced (notably as regard mandatory certification of cash registers software and systems, the taxable basis computation subject to reduced rate in some specific circumstances, single VAT representative, …).

In addition, favorable measures are implemented, such as the suppression of the highest rate (3rd threshold) of the salary tax or the reduction of the late interest rate due to the Treasury (even if the late interest due by the Treasury is accordingly reduced).

Mandatory certification of cash registers software and systems

The scope of the law is fine-tuned. The obligation covers only persons carrying out supplies of goods and services not subject to VAT invoicing requirements under Article 289 of the French Tax Code. Besides, are exempted (i) taxpayers benefiting from the VAT exemption regime due to their low turnover (“franchise en base”), (ii) businesses benefiting from the specific agricultural VAT regime or (iii) businesses carrying out VAT exempted activities. Unfortunately, as of today, there is no precise defined concept of cash registers software and systems. These provisions are applicable as from 1 January 2018.

Precisions around the taxable basis of e-press and television services offered in bundle and subject to reduced VAT rates: clarification of the scope of the 2.10% and 10% VAT rates

Two methods are now in force.  

  • If a supplier who offers a bundle of services (including phone, TV and e-press) also markets in comparable conditions a bundle without e-press, the 2.10% VAT rate will be applicable to the additional fee requested for providing e-press services.
  • If not, and only in this case, the 2.10% VAT rate will be applicable to the fees paid by the operator per customer for acquiring the e-press service (net of specific costs incurred by press editors to the operators) capped to the price billed by the operators to the customers.

The same rules are applicable for the determination of the taxable basis of the operations subject to the 10% VAT rate (TV services). These provisions are applicable to the concerned services for which the chargeable event and tax point occur as of 1 March 2018.

Removal of the highest rate (20%) of the salary tax

The highest rate (3rd threshold) of the salary tax applicable for the annual individual wages exceeding EUR 152.279 is removed. Then, the highest rate of the salary tax is 13.60% now. It is applicable to the portion of the annual individual wages exceeding EUR 15.417. This provision is applicable to the wages paid as of 1 January 2018.

Reduction of late interest rate due to or by the Treasury 

The monthly late interest rate applicable in tax and customs matters (interests due to or by the Treasury) decreases from 0.40% to 0.20% for interest due as of 1 January 2018 until 31 December 2020.

Single Tax representation as of 1 January 2019

Foreign businesses subject to representation obligation in France for (i) VAT purposes – except “punctual” VAT representative appointed in the frame of some operations linked to tax warehouses – (ii) withholding personal income tax purposes and (iii) other indirect tax purposes are due to appoint a single tax representative as of 1 January 2019. The accreditations already obtained in the past will remain valid and will be extended to all the taxes covered by the single tax representation regulation.